The Indian stock market witnessed an extraordinary surge on Tuesday, with both the Sensex and Nifty 50 rallying for the second consecutive session. The bullish sentiment remained strong across large-cap and broader markets, taking investors and market analysts by surprise.
Despite global brokerage Morgan Stanley revising its year-end Sensex target downward from 93,000 to 82,000, investor confidence in Indian equities has shown remarkable resilience.
Rallying for the second straight session, the 30-share BSE Sensex jumped 1,577.63 points or 2.10 per cent to settle at 76,734.89. During the day, it zoomed 1,750.37 points or 2.32 per cent to 76,907.63, driven by the across-the-board rally.
The NSE Nifty surged 500 points or 2.19 per cent to 23,328.55. Intra-day, it rallied 539.8 points or 2.36 per cent to 23,368.35. The key indices have recovered almost all the losses induced by Trump's reciprocal tariffs announced on April 2.
This rally wasn’t confined to just frontline indices. The Bank Nifty index too exhibited strength, opening at 52,299 and closing at 52,379, recording a gain of 1,377 points for the day. Over two sessions, it has surged by over 2,150 points.
Broader market participation was evident as the BSE Small-cap and Mid-cap indices registered gains of around 3.2 pc and 3 pc respectively.
Notably, 640 BSE-listed stocks hit circuit limits 469 locked in the upper circuit, while 171 hit the lower circuit. A total of 91 stocks reached 52-week highs, among them Bajaj Finance, Bharti Airtel, and Indigo.
So, what has driven this sudden surge in investor optimism?
According to market experts, the rally stems from a confluence of global and domestic factors. The key reasons include shifts in the US financial markets, expectations around trade negotiations, weakness in the US dollar, hawkish signals from the US Fed, and the Reserve Bank of India’s steady stance on inflation.
One major influence has been the simultaneous crash in both US bond and equity markets following the implementation of tariffs by President Donald Trump.
Contrary to typical market behaviour, both markets declined together, hinting at broader economic concerns and encouraging investors to look toward emerging markets like India.
The move has stirred speculation that the US administration may soften its stance, making investors optimistic about global trade dynamics.
Furthermore, the 90-day pause in the US tariff policy has fuelled expectations of renewed trade negotiations. Investors are hopeful that a breakthrough may be achieved, which would benefit global markets, including India.
The weakening US dollar has also played its part. With the dollar index falling below 100—a two-year low—foreign institutional investors may look to shift funds from US assets into Indian equities.
Adding to this momentum is the clear divergence between President Trump’s push for rate cuts and the US Federal Reserve’s hawkish stance.
Fed Chairman Jerome Powell’s insistence on controlling inflation before any rate easing has created uncertainty in the US market, prompting investors to explore opportunities in more stable environments like India.
On the domestic front, the RBI’s recent monetary policy update has offered reassurance. The central bank retained its 4 pc inflation projection for 2025–26, suggesting that inflation risks remain balanced.
RBI Governor Shaktikanta Das also pointed out a decline in inflation during January and February 2025, driven by falling food prices, which has been welcomed by market participants.
Market analysts believe that the current rally is also being driven by strong technical cues. Anshul Jain from Lakshmishree Investment noted that the Nifty has shown a classic reversal pattern, with bullish gaps and rising volumes suggesting urgency in buying.
The next target for Nifty is set near 23,869, while Bank Nifty could move towards 53,888 if it sustains above 52,000. Sensex too has displayed signs of a strong uptrend after sweeping previous swing lows.
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