Markets rally on trade war relief, rate cut hopes; Sensex surges 1,397 points

Equity markets staged a remarkable recovery on Tuesday, with the benchmark Sensex surging 1,397.07 points to close at 78,583.81, as easing global trade tensions and expectations of an interest rate cut by the Reserve Bank of India boosted investor sentiment.

The broader Nifty 50 index gained 378.20 points to end at 23,739.25, marking a significant rebound from Monday’s session. The rally was broad-based, with banking and financial services stocks leading the gains ahead of the RBI’s monetary policy meeting.

“India could outperform in a weak global market, and as a rebound has been triggered in the global sentiment, it has fuelled a sharp surge in domestic equities,” said Vinod Nair, Head of Research at Geojit Financial Services. He noted that while overall market sentiment remains positive, large-cap stocks are the preferred choice, with banking stocks rallying in anticipation of a rate cut in this week’s RBI policy.

Financial services emerged as the top-performing sector, gaining 2.11 per cent, followed by banking stocks which rose 1.93 per cent. Among individual stocks, Shriram Finance led the gainers with a 5.65 per cent jump, followed by L&T (+4.19 per cent), BEL (+3.68 per cent), IndusInd Bank (+3.68 per cent), and Adani Ports (+3.54 per cent). On the flip side, Trent witnessed the steepest decline of 6.44 per cent, followed by ITC Hotels (-4.24 per cent), Britannia (-1.28 per cent), Hero MotoCorp (-1.09 per cent), and Nestlé India (-0.74 per cent).

The market breadth remained positive, with 2,509 stocks advancing against 1,410 declines on the BSE. Sixty-six stocks hit their 52-week highs, while 84 touched their 52-week lows.

Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates Ltd., noted that “The Nifty has formed a big green candle of daily scale, indicating strength. Furthermore, the index has crossed the barrier of 23,630-23,640 and remained above it, indicating fresh buying interest.” He advised traders to adopt a buy-on-dips strategy as long as the index holds 23,630.

The Indian rupee gained against the US dollar, trading at 87.08. “Some relief emerged from global trade de-escalation talks,” noted Jateen Trivedi, VP Research Analyst at LKP Securities. “Ongoing discussions between Mexico, Canada, and the U.S. on tariff adjustments have eased some pressure on emerging market currencies.”

According to Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, “Volatility would intensify if there is no proper solution to the ongoing tariff war.”

Shrikant Chouhan, Head Equity Research at Kotak Securities, stated, “The market successfully cleared the 23,500/77800-resistance zone, and post-breakout, the positive momentum intensified.” He identified 23,600/78100 and 23,500/77800 as key support zones, while 23,800/78700-23,850/78900 could act as key resistance areas.

Technical analysts remain optimistic about the market’s trajectory. Rupak De, Senior Technical Analyst at LKP Securities, suggested that the Nifty could move toward 24,050 and higher, with support levels at 23,500 and 23,250.

Ajit Mishra, SVP Research at Religare Broking Ltd, emphasized the importance of the banking sector’s performance, stating, “The banking and financial sectors have played a key role in the recovery, and a decisive move past the 50,200 level in the banking index will be crucial for sustaining the momentum.”

Market participants will closely monitor the upcoming RBI monetary policy meeting, which will be the first under the new governor, as well as global trade developments for further cues.