The stock market staged a smart comeback on Tuesday, a day after a global stock market rout wiped out over $10 trillion in wealth.
Tracking gains in major Asian markets, benchmarks Sensex and Nifty snapped their three-day losing streak — during which they recorded losses of up to 5% — following the reciprocal tariffs announcement by US President Donald Trump on April 2.
The Sensex gained 1,089.18 points, or 1.49%, to close at 74,227.08, while the Nifty rose by 374.25 points, or 1.69%—its highest percentage gain in three months—to settle above the 22,500-mark at 22,535.85.
Investor sentiment was buoyed by hopes of positive outcomes from bilateral trade talks, as several countries affected by the US tariff announcement reached out to Washington. Japan led the gains in Asia with a 6% rise, amid reports that it would be given priority in US trade talks. The Philippines, China, and Hong Kong also posted notable gains, rising up to 3.15%. Many European equity indices also traded in the green, gaining nearly 3%.
Expectations of a possible repo rate cut and a shift to an “accommodative” policy stance by the Reserve Bank of India (RBI) in its monetary policy meeting on Wednesday also supported the domestic market sentiment.
“Positive global cues aided a massive recovery in local benchmarks, as concerns over US trade tariffs faded slightly on hopes that most nations would find ways to overcome the challenge,” said Prashanth Tapse, senior vice-president (research) at Mehta Equities. He added that India, being largely a consumption-led economy, may not be as severely impacted by the US tariffs compared to some other countries.
On Tuesday, foreign portfolio investors (FPIs) were net sellers of Indian equities to the tune of Rs 4,994.24 crore, while domestic institutional investors were net buyers, with purchases totalling Rs 3,097.24 crore, according to provisional data from the BSE.
The market breadth was overwhelmingly positive, with 3,093 gainers versus 871 losers on the BSE. The broader indices outperformed the benchmarks, with the BSE Midcap and BSE Smallcap indices rising 1.87% and 2.18%, respectively. These indices had fallen 6.4% and 7.4%, respectively, over the previous two sessions.
Market volatility eased as the India VIX index fell 10.31% to 20.44 on Tuesday, after recording a 65% jump in the previous session.
On the sectoral front, PSU banks, oil & gas, realty, consumer durables, and telecom led the gains, rising up to 2.64%. Barring Power Grid (down 0.14%), all Sensex and Nifty stocks ended in the green.
Jio Financial, Shriram Finance, BEL, Adani Enterprises, and Cipla were the top Nifty gainers, rising up to 5.61%. Investors’ wealth surged by Rs .32 lakh crore, recovering nearly half of Monday’s loss of Rs 14 lakh crore.
However, some market experts urged investors to maintain a cautious stance and not to give too much weight to the single-day rebound.
“Participants are advised not to read too much into this single-day recovery, as tariff-related developments are likely to keep volatility elevated. Moreover, the outcome of the MPC’s monetary policy meeting could add to market swings, especially with the weekly expiry approaching,” said Ajit Mishra, senior vice-president (research) at Religare Broking.