India-US Trade Deal Fuels Optimism for Indian Stock Markets
The Indian stock market is bracing for a significant upward movement on Tuesday, with benchmark indices Sensex and Nifty 50 anticipated to open with substantial gains. This optimistic outlook follows the landmark announcement by US President Donald Trump regarding a trade agreement between India and the United States, established after discussions with Prime Minister Narendra Modi.
Key Announcements and Market Implications
President Trump revealed that the United States will reduce reciprocal tariffs on Indian goods from 25% to 18%, while India has committed to lowering its tariffs and non-tariff barriers against US products to zero. This development has markedly enhanced global risk sentiment, providing a strong impetus for market rallies across Asia and positive closures on Wall Street.
On Monday, the Indian equity markets demonstrated resilience, recovering partially from earlier losses. The Sensex surged by 943.52 points, or 1.17%, concluding at 81,666.46. Similarly, the Nifty 50 advanced by 262.95 points, or 1.06%, settling at 25,088.40.
Ponmudi R, CEO of Enrich Money, commented on the market dynamics: "As markets gradually absorb the Budget impact, yesterday's rebound highlighted selective value buying in infrastructure, defence, and large-cap stocks. Overall, the trade deal offers a strong near-term sentiment boost, particularly for export-oriented and manufacturing sectors, while continued government focus on capex provides a steady underlying support for the broader market."
Global Market Cues Influencing Indian Indices
Asian markets exhibited strong performance on Tuesday, buoyed by the India-US trade agreement. Key movements include:
- Japan's Nikkei 225 rallied by 2.44%, with the Topix gaining 1.94%.
- South Korea's Kospi jumped over 5%, triggering a buy sidecar, while the Kosdaq rose 2.32%.
- Hong Kong's Hang Seng index futures indicated a higher opening.
The Gift Nifty was trading around the 25,939 level, reflecting a premium of nearly 797 points from the Nifty futures' previous close. This suggests a gap-up start for Indian stock market indices.
Wall Street Performance and Sector Highlights
US stock markets ended higher on Monday, driven by gains in chipmakers and companies associated with artificial intelligence. Notable performances include:
- The Dow Jones Industrial Average rallied 1.05% to 49,407.66.
- The S&P 500 gained 0.54%, closing at 6,976.44.
- The Nasdaq advanced 0.56% to 23,592.11.
Individual stock movements featured Apple's share price surging 4.04%, while Nvidia declined 2.89%. AMD shares jumped 4.03%, and Microsoft fell 1.61%. Alphabet stock rose 1.9% to a record high, with Amazon adding 1.5%. SanDisk spiked 15.4%, and Micron Technology shares increased by 5.5%.
Economic Indicators and Commodity Updates
US factory activity showed signs of recovery, with the Institute for Supply Management reporting a manufacturing PMI rebound to 52.6 in January, the highest since August 2022. This marks an improvement from December's 47.9, ending a ten-month contraction streak.
In commodity markets, gold prices rose by 2.5% to $4,778.16 per ounce, recouping previous losses. Silver prices advanced 4.3% to $82.69. The dollar index remained stable at 97.50, while crude oil prices steadied after recent declines. Brent crude fell 4.36% to $66.30 a barrel, and US West Texas Intermediate crude futures declined 0.26% to $61.98.
The India-US trade deal, coupled with positive global cues, sets a favorable stage for Indian markets, with analysts highlighting potential benefits for export-driven and manufacturing sectors.
