CHENNAI: Buoyed by improved global sentiment and a positive shift in international trade developments, the BSE Sensex surged by 716.25 points at 9.57 am, and slipped to 695.20 points at 82416.28 as of 10.11 am, while the NSE Nifty breached the psychological 25,000 mark, gaining more than 150 points in early trade.
The rally comes on the heels of a market-soothing announcement by U.S. President Donald Trump, who extended the deadline for trade negotiations with the European Union. The move helped ease immediate geopolitical tensions, contributing to a risk-on mood across global equities.
Key Drivers of the Rally
Global Cues: The trade extension by the U.S. lifted investor confidence, while expectations of a possible U.S. tax policy shift added to the positive global outlook.
RBI Dividend Boost: The Reserve Bank of India's record ₹2.68 lakh crore dividend to the government has injected optimism, potentially supporting fiscal spending ahead of the Union Budget.
Foreign Inflows: Despite ongoing volatility, foreign portfolio investors (FPIs) have poured in $2.25 billion into Indian equities so far in May, reflecting relative confidence in India's growth story.
Domestic Macro Watch:
Investors are eyeing India’s Q1 FY25 GDP data, which is expected to show a 6.0% year-on-year growth rate. While the figure would reflect steady economic momentum, markets remain cautious given the underwhelming corporate earnings for Q4 FY25. The Nifty-50 index posted a modest 5.8% YoY earnings growth, raising concerns about stretched valuations.
Sectoral & Regional Snapshot:
Asian markets traded mixed, with Japan’s Nikkei in the green while Chinese and Korean benchmarks saw marginal losses. Back home, buying was seen across banks, auto, and capital goods sectors, with mid- and small-cap indices also participating in the rally.
Monday’s surge however reflects renewed optimism in both domestic and global markets, according to analysts. A sustained momentum will depend on upcoming economic data, global policy cues, and corporate performance. Investors are advised to remain selective and focus on fundamentally sound stocks amid likely near-term choppiness.