Sensex Jumps 1,100 Pts; Nifty Off to Strong Start but Wall Street Selloff Spoils Party
The BSE Sensex surged by 1,113.44 points, or 1.51%, reaching 74,960.59, while the Nifty climbed 347.25 points, or 1.55%, to settle at 22,746.40.
- This strong start came after Asian markets rallied up to 8% in the previous session.
- However, the domestic market was closed on Mahavir Jayanti.
Despite the positive opening, the strong momentum was dampened by global market uncertainty.
- An analyst noted that the gap-up opening was unlikely to sustain given the uncertainty in global markets.
- President Trump’s pause on reciprocal tariffs was overshadowed by fears of escalating trade tensions, particularly between the US and China.
Wall Street Selloff and Global Market Impact
The Wall Street selloff overnight negatively impacted sentiment, with concerns about new US tariffs on China.
- The Dow Jones fell 1,014.79 points (2.5%), closing at 39,593.66.
- The S&P500 and Nasdaq also faced significant drops, down 3.5% and 4.3%, respectively.
Markets in Japan and South Korea also saw declines of up to 3.7%.
- Chinese equities remained relatively flat amid the global volatility.
VK Vijayakumar of Geojit Investments emphasized that the US bond market played a role in these declines, with big selling pushing the 10-year bond yield to 4.5%.
- This increase in yields signals a lack of safe-haven buying, which had previously supported market stability.
US Tariffs and Impact on Global Markets
Nomura highlighted that the average effective tariff rate between the US and its trading partners now stands at around 24%.
- The pause in tariffs is expected to provide some relief for Asian stocks (except for Hong Kong and China).
- The market positioning and prevailing bearish sentiment suggest that President Trump’s retreat is a positive risk for stocks.
Emkay Global sees this temporary halt in tariffs as a positive development for India’s market.
- The brokerage predicts minimal chances for the April 2 tariff proposals to be enforced.
- It remains optimistic about high-beta sectors and anticipates a rebound in small-cap and mid-cap stocks, which have underperformed recently.
Outlook for India’s Stock Market
Emkay Global believes that Indian stocks are positioned for a strong rally.
- Earnings estimates are bottoming out, and the downgrade cycle is expected to reverse.
- Valuations for the Nifty and other indices, like the BSE 500, have corrected, with the median PE down by 21% in the last 6 months.
Given the favorable macros and India’s relative immunity to the ongoing trade war, investors are encouraged to remain optimistic despite global volatility.
- Indian markets could continue to benefit as global factors stabilize, and the tariff pause provides breathing room for growth.
Conclusion
While Sensex and Nifty started strong, the global market volatility and Wall Street selloff have created caution in the short term.
- However, Indian macros remain strong, and market conditions suggest a potential rally in the near future.
- Sectoral shifts and favorable valuations point to a positive outlook, particularly for small-cap and mid-cap stocks.