India’s equity market is showing signs of recovery after facing severe selling pressure over the last one month and recording continuous declines since late September 2024. The two benchmark indices—BSE Sensex and NSE Nifty50—have gained 2% in the past two sessions, rekindling hopes of a turnaround among investors.
The fresh gains come as global cues improved after U.S. President Donald Trump softened his tariff stance on automakers from Canada and Mexico. Additionally, an improvement in the Chinese economy provided a much-needed boost to metal stocks, while a fall in crude oil prices also lifted sentiment.
At Thursday’s close, the Sensex was up 609.86 points or 0.83% at 74,340.09, and the Nifty was up 207.40 points or 0.93% at 22,544.70. On Wednesday, the two indices had gained more than 1% each. The broader market also showed strength on Thursday, with the BSE Small Cap index rising nearly 1.63% and the BSE Midcap index up by 0.65%.
“A key driver of today’s gains was China’s GDP growth forecast, which lifted sentiment. Beijing set a 5% growth target for 2025, despite ongoing trade tensions with the US. This optimism translated into a 2.3% surge in Nifty Metals, reflecting investor confidence in global economic resilience,” said Sundar Kewat, Technical and Derivatives Analyst, Ashika Institutional Equity.
In the U.S., Trump’s 25% tariffs on Canada and Mexico forced the auto industry to reassess production strategies. However, the White House provided temporary relief, announcing a one-month exemption for vehicles complying with USMCA’s rules of origin. Trump also hinted at a potential 30-day pause on tariffs, contingent on automakers expanding production in the US.
Overall, a combination of upbeat global trends and favorable policy developments fueled today’s rally, keeping Indian equities firmly in positive territory, added Kewat.
Asian Paints, Coal India, Hindalco Industries, BPCL and NTPC were the top gainers in the Nifty50 pack. On the sectoral front, the Nifty Metal index led the rally, surging 2.3%, followed by gains in the Nifty Energy, PSU, and Nifty Oil & Gas indices.
“Metal stocks saw robust buying activity, fueled by a drop in the US dollar index and optimism surrounding China's stimulus package. The US dollar index fell to a four-month low, benefiting emerging markets like India,” said an analyst at Bajaj Broking.
Prashanth Tapse, Senior VP (Research), Mehta Equities, said that the recovery is due to the incessant fall markets witnessed over the past few weeks, and some stocks from several sectors have become attractive as their business fundamentals remain strong.
However, he warned that the recovery could face disruptions as Trump's tariff statements will continue to make investors nervous and trigger selling going ahead.
Analysts still remain uncertain whether the two-session rally will lead to a sustained recovery, as global markets continue to face uncertainty over trade wars. Prior to Wednesday’s gain, the Nifty50 and Sensex had declined more than 16% each from their September 2024 peak and had slumped about 7% each in 2025.
The recent correction is largely attributed to Trump’s tariff actions and significant outflows of foreign investors from India. Additionally, slowing economic and corporate earnings growth, a weakening rupee, and expensive valuations have weighed on the local market.