Continued FII inflows and the forecast of an above-normal monsoon also contributed to the market’s outperformance relative to other emerging economies.
New Delhi: Indian benchmark indices Sensex and Nifty have been surging for the last four trading sessions as investors turned buoyant after foreign investors returned to domestic equities. However, the sharp rebound in the market on Tuesday, after an extended weekend, itself helped Sensex recover all the losses it suffered since the US reciprocal tariffs were announced on April 2, 2025. According to reports, this has made India the first major market globally to erase losses stemming from the reciprocal tariffs announced by US President Donald Trump. So what exactly helped Indian stock markets in this quick recovery? Let’s find out.
The domestic market experienced a strong resurgence during the holiday-shortened week and Vinod Nair, Head of Research, Geojit Investments Limited, fell that the rally gained momentum following a pause in US reciprocal tariffs, with exemptions granted to products such as smartphones and computers.
Continued FII inflows and the forecast of an above-normal monsoon also contributed to the market’s outperformance relative to other emerging economies.
“Investor sentiment was buoyed by expectations that the US-China trade dispute may not harm, but rather benefit, India. At present, the domestic macroeconomic environment remains supportive, encouraging investors to increase their exposure to riskier assets for the long term. Additionally, the inflation outlook appears favorable, reinforced by forecasts of an above-normal monsoon and a decline in oil prices,” Nair said.
What Happened In Markets Past Week?
The Nifty-50 Index and Sensex each gained around 6 per cent in the past week as markets resumed the risk-off sentiment. While the mid-cap index gained around 6 per cent and the small-cap index gained around 8 per cent in the past week, global equity markets witnessed sharp volatility amid uncertainty surrounding global tariff actions.
Sector-wise, all indices ended in green with Capital goods (6.8 per cent), IT (2.5 per cent), Metal (8.1 per cent), Realty (8.9 per cent), Bank Nifty (8.2 per cent), FMCG (3 per cent), Power (6 per cent), Telecom (8 per cent) and Auto (6.1 per cent) sectors as major sectoral gainer. Indian VIX was down 99 per cent. Within the Nifty, IndusInd Bank (+17.6 per cent), Axis Bank (+12.3 per cent), and Adani Port (+11.8 per cent) gained the most, while there were no losers.
Indian equity markets also turned attention to the Q4FY25 earnings season, with investors having muted expectations for the season. In economic news, the goods trade deficit widened to US$287 bn in FY2025 from US$245 bn in FY2024 and CPI inflation remained comfortable at 3.3 per cent in March, with continued moderation in food prices.
According to Shrikant Chouhan, Head Equity Research, Kotak Securities, the escalating US-China trade war has further positioned India as an attractive alternative for global manufacturing, with India maintaining a conciliatory approach and working toward a provisional trade agreement with the US.
Impact of Tariff Threats On The World
Globally, the 10-year US Treasury yields rose this week as investors weighed the state of the US economy after Federal Reserve Chairman Jerome Powell raised concerns about the inflationary and economic growth risks of the White House’s tariffs.
In Europe, the European Central Bank is widely expected to trim interest rates for the third time this year as global tariff tensions and uncertainty threaten the euro zone’s economic growth.
In Asia, China has rolled out a series of non-tariff restrictive measures. Japan’s export growth declined to 3.9 per cent, down from February’s 11.4 per cent jump. Oil prices rose this week and traded near their highest in two weeks on supply concerns after the United States imposed new sanctions to curb Iranian oil exports.
What Future Holds For Indian Stock Markets?
Amol Athawale, VP-technical Research, Kotak Securities, believes that the short-term market texture is bullish.
“We believe that the short-term market texture is bullish; however, due to temporary overbought conditions, we may see range-bound activity in the near future. For traders, the levels of 23,500/77400 and 23,350/76900 would act as key support zones, while resistance areas for the bulls could be found between 24,000/79000 and 24,200/79600. However, if the market dips below 23,350/76900, sentiment could change, prompting traders to consider exiting their long positions,” he said.
