Markets staged a stunning comeback on Thursday, with the Sensex and Nifty erasing early losses to post sharp gains, fuelled by optimism over a possible US-India trade deal, easing inflation, and sustained FII interest
Thursday turned out to be terrific rollercoaster ride for the Indian stock market as benchmark indices—the Nifty 50 and Sensex reversed early losses to post strong gains on May 15. With bulls getting back into action, the Nifty 50 marched past the 25,100-mark for the first time since October last year, while the Sensex leapt 1,400 points or nearly 2% to its day’s high.
After a sluggish start that saw the Sensex drop over 500 points in early trade, markets made a dramatic turnaround. The Sensex rebounded sharply to touch an intraday high of 82,718.14, soaring1,387.58 points, or 1.7%. The Nifty wasn't far behind, jumping 442.45 points, or 1.79%, to scale an intraday high of 25,109.35, crossing the 25K mark.
The benchmarks also managed to hold on to much of their gains as the BSE Sensex climbed 1,200 points, or 1.48%, to end the day at 82,530, while the Nifty jumped 395 points, or 1.60%, finishing at 25,062.
The rally in the market was also broad based as all major sectors ended in the green territory.
Such a sharp trend reversal in trade came on the back of latest comments from US President Donald Trump, which hinted towards a potential trade deal between US and India, rejuvenating investor sentiment.
Speaking at an event in Doha, Qatar, Trump revealed that India offered a ‘no-tariff’ deal to the US, sparking hopes of the negotiations seeing a positive outcome. "It is very hard to sell in India, and they are offering us a deal where basically they are willing to literally charge us no tariffs," Trump said as per a Reuters report.
With Trump’s 90-day reprieve on reciprocal tariffs set to end in early July, investors remain keen on India finalising a trade deal with the US before the deadline arrives. Trump had slapped 26% levies on Indian exports as part of his reciprocal tariffs.
Banking on these expectations, foreign institutional investors have also shown continued interest in Indian equities which turned out to be another factor that drove the markets higher.
Meanwhile, a softer than expected retail inflation print for April further sparked hopes of the RBI delivering another rate cut at its next meeting, bolstering sentiment for rate-sensitive sectors like realty. Retail inflation cooled sharply to 3.16 percent in April, down from 3.34 percent in March and 4.83 percent a year ago.
"The market staged a robust rebound, closing with substantial gains, driven by a decline in domestic inflation and positive signals from the US regarding a potential trade agreement with India," said Vinod Nair, Head of Research, Geojit Investments.
On the technical front, sees a bullish candle on the daily charts, along with an uptrend continuation pattern on intraday charts, which suggests that the market may extend its upward momentum from current levels.
"While the broader outlook remains positive, a prudent approach for day traders would be to buy on intraday dips and book profits on rallies," Chouhan said.
On the downside, he sees 24,900 and 24,750 are seen as key support zones for the Nifty while resistance is likely to come around 25,210–25,300. Chouhan further feels that a breach below 24,750 could, weaken the ongoing uptrend for the 50-stock index.