Tuesday morning saw a strong increase in markets as investors reacted positively to the long-awaited trade agreement between the US and India. All things considered, the news improved market sentiment, which resulted in robust purchases of both frontline equities and more general market names. Early trading saw a nearly 3% increase in both the Sensex and Nifty as worries about international trade and tariffs subsided.
At 9:28 a.m., the NSE Nifty50 increased 691.70 points to 25,780.10, while the S&P BSE Sensex surged 2,271.45 points to 83,937.54. Investors’ reaction to the explanation of the India-US trade deal, which had been postponed for months and was thought to be a major factor in the current market downturn, caused the strong increase.
Soon after the opening bell, buying took place in large-, mid-, and small-cap stocks, which caused the majority of indexes to move into positive territory.
WHY MARKETS WERE BOOSTED BY THE INDIA-US TRADE DEAL
The statement, said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, has significantly altered the market outlook.The US decision to lower tariffs on India from 50% to 18% and the dramatic announcement of the long-awaited US-India trade accord are transformative for the Indian economy and stock markets. He stated that the only significant factor affecting the markets was the deal’s delay.
He clarified that growth, earnings, and currency markets will all be impacted by the purchase.First, with increased exports to the US, India’s growth rate is expected to increase to about 7.5% in FY27. Two, corporate profits, which have already begun to show indications of improvement in FY27, may rise to between 16% and 18%. Three, the rupee would become much more valuable,” Dr. Vijayakumar said.
He noted that the general mood of the market has improved as a result of the US-India trade agreement, the EU-India trade agreement, and a growth-focused budget.The US-India trade agreement, the EU-India trade agreement, and the growth-oriented budget will all work together to improve market sentiment and the economy’s animal spirits,” he added.
ADDS TO THE RALLY WITH SHORT COVERAGE
Also, Dr. Vijayakumar stated that technological factors are contributing to the recent fast increase.Technically, short-covering will occur in the extremely short market, which will accelerate the surge, he added.
He thinks the recovery will be broad, but the resurgence of foreign interest may boost large-cap companies’ performance.All of the markets will see a rise, but the affordable priced largecaps may do better thanks to FII inflows, he added.
He noted that there will probably be a lot of buying interest in banking stocks, non-banking finance firms, telecom, capital goods, IT stocks, and textiles.
TOP SENSEX GAINERS AND LOSERS
The market had a strong positive opening. With a 7.05% increase, Adani Ports and Special Economic Zone Ltd. were the top Sensex gainers. With a gain of 6.09%, Bajaj Finance Ltd. came next. Bajaj Finserv Ltd. gained 4.56%, while Eternal Ltd. increased 5.39%. in addition, InterGlobe Aviation Ltd. increased by 4.14%.
Despite the robust market, a few equities had losses. Power Grid Corporation of India Ltd. fell 1.30%, Bharat Electronics Ltd. fell 1.37%, NTPC Ltd. fell 1.36%, UltraTech Cement Ltd. fell 1.18%, and Hindustan Unilever Ltd. down 0.58%.
India overtakes its Asian rivals.
The tariff decrease, according to Vikram Kasat, Head Advisory at PL Capital, puts India in a better position than many Asian nations that rely heavily on exports.India’s tariff rate is now lower than that of other major export-oriented Asian nations, at 18%,” he stated.
He said that duties on Bangladesh, Sri Lanka, Taiwan, and Vietnam are 20%, while tariffs on Indonesia, Malaysia, Thailand, the Philippines, and Pakistan are 19%. 19% tariffs also apply to Cambodia.
According to Kasat, the agreement covers a number of crucial topics.The deal calls for reducing reliance on Russian oil, increasing US imports by $500 billion, and lowering US tariffs on India from 50% to only 18%, he claimed.
The agreement may promote interest rate and currency stability, he continued. In the words of Kasat, the trade agreement is expected to stabilize the currency and reduce pressure on local interest rates.
Sectors Most Likely to Gain
Labor-intensive industries are anticipated to benefit the most, according to Kasat.The obvious beneficiaries are labor-intensive industries like textiles, jewelry and gems, and engineering products, all of which had growth challenges as a result of increased tariffs, he stated.
He said that India will have to shift where it gets its crude oil.After Russian oil-related fines are lifted, India would have to switch from using Russian crude oil to imports from the US and Venezuela, according to Kasat.
For Kasat, the trade agreement eliminates significant investment uncertainty.
“Indian equity markets are expected to surge 3% on open as the deal completely eliminates key policy uncertainties,” he stated.
Strong sentiment may result in new foreign inflows, he continued.Many participants, especially FPIs that are significantly short in the market, will be forced to cover their positions as a result of this good surprise, which could result in a significant increase across indexes and derivative stocks during today’s session, according to Kasat.
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