The markets are gaining ground steadily after a positive start. The Sensex and the Nifty are up smartly with over 1% gains each. What’s particularly striking is that the Nifty is rallying comfortably above the 22,300 mark. This is another key psychologically important level that it breached below during the recent correction over the past few days. The Sensex is also up over 700 points. Auto, power and tech stocks are among the top gainers in trade today.
A quick check of the sectoral indices indicate that the Nifty Auto, BSE Power and BSE Metal are amongst the top gainers. The broader markets too have been on a steady uptrend with both the BSE Midcap and the BSE Smallcap clocking in 2% plus gains supported by brisk gains.
Rohan Shah Technical Analyst, Asit C Mehta Investment Interrmediates explained that, “Indian equities staged a relief rally today after a record 10 consecutive negative closings and consecutive five months of decline. The index has multiple supports in the 21,800–22,000 zone, aligning with the 100-week EMA, an AB=CD Harmonic pattern, and a key demand zone. Additionally, breadth and momentum indicators have reached extreme oversold readings, reinforcing the rebound.
In the near-term, 21,800 remains a critical level, a breakdown below this could extend the decline towards 21,300. Conversely, if 21,800 is defended, the recovery could extend toward 22,800–23,000, which serves as the polarity resistance zone.”
Here are 4 reasons why the stocks are rallying today-
There are many reasons why the market is rallying today from optimism across Asian peers to concerns about tariff calming down-
Reciprocal tariff may have limited impact
US President Donald Trump announced reciprocal tariff ion India and China starting April 2. However, i has failed to impact investor sentiment too much for two key reasons. First and foremost. the US Commerce secretary, Howard Lutnick indicated some relief on tariffs for Mexico and Canada, during a conversation with Fox Business Network. The investors take this as a positive and expect a potential relook into other tariffs as well. Moreover, given the fact that India has a miniscule share of the global trade and the reciprocal tariff, even if levied are expected to have a limited effect. Trump singled out India in mentioning that, “India charges us auto tariffs higher than 100 percent.” However, auto stocks were amongst the top gainers in trade today as India hasn’t exported any vehicle to India in recent times. As reported by FinancialExpress.com earlier, the reciprocal tariff does not impact due to the localisation of components and limited exports to the US. Most experts highlight how India is largely domestic driven economy. That acts as a cushion to offset the impact.
China sets 5% GDP target, announces stimulus
One of the big reasons why the Asian markets were able to shrug off the tariff jitters is because of the stimulus announcements by China. China in a bid to boost the economy despite the reciprocal tariffs, announced a series of stimulus measures and set a growth target of 5% for 2025. Given the flow of data from China, Nomura has revised its GDP target for China upwards to 4.5%. According to Nomura, “the upward revision to 2023 GDP growth, and relatively steady growth in recent months, we have revised up our 2025 GDP growth forecast to 4.5% from 4.0%.”
Value buying opportunities in large caps
Given the recent correction, the valuation of many blue chips have come down to more attractive levels. According to the latest report by Motilal Oswal, “The Nifty is trading at a 12-month forward P/E of 18.6x, below its long-period average (LPA) of 20.5x. Thus, we continue to remain biased toward large caps with a 76% allocation in our model portfolio. We are Overweight on Consumption, BFSI, IT, Industrials, Healthcare, and Real Estate, while we are Underweight on Oil & Gas, Cement, Automobiles, and Metals.”
Mid and smallcaps see brisk buying
Not only are the large caps seeing brisk buying in trade today, even the small and midcaps are participating actively. According to most market analysts the recent sharp correction across broader markets has brought down valuations of many entities to very attractive levels. Therefore, they feel investors are now looking out for value buys in the space after the sharp spate of correction. The positive newsflow and Asian cues has also boosted investor sentiment.