Sensex Rises Over 1,400 Points: 3 Reasons Why Markets are Up

Stock market today: Markets have yet again taken an upward trajectory. Benchmark indices, Sensex and Nifty, surged as investor sentiment changed from pessimism, thanks to Trump rolling back his tariff call on Mexico and Canada.

At 10:45 am, BSE Sensex was trading at 77,510.29 level, up by over 323 points. Whereas, NSE Nifty surged over 88 points, trading at 23,449 level.

Among the sectoral indices, Nifty PSU Bank came out on top with a surge of over 147 points or 2.41%.

From BSE Sensex pack, L&T, Tata Motors, IndusInd Bank, Axis Bank and Ultratech Cement were among the top gainers. Interestingly, FMCG stocks took a sharp plunge. The sectoral index, nifty FMCG, was among the worst-performing indices on Tuesday, down by nearly 500 points or 0.85%.

Here's what pushing the markets up:

1. Trump Rolls Back Tariffs

After announcing a tariff imposition of 25% on Canada and Mexico, the Trump administration has reportedly put a hold on the regulation after both nations threatened with retaliatory actions.

Canada had already started removing American alcohol after Trump's tariff last Saturday.

"The decision taken by Trump to temporarily freeze the tariffs on Mexico and Canada and start negotiations is a clear indication of President Trump’s strategy: That is, impose tariffs and then negotiate and strike a deal. The same strategy is likely to be tried with China, too. It is important to understand that a full blown trade war will be damaging for the US, too," said V K Vijayakumar, chief investment strategist, Geojit Financial Services.

2. Dollar Index Declines

The dollar index declined to 108 giving a slight relief to currencies of emerging economies.

"The drop in the dollar index to 108 is a positive development. Emboldened by the excellent Budget, investors, especially DIIs, are likely to step up investment, particularly in discretionary consumption segments," said Vijayakumar.

D-street players are also finding some relief as sentiments around Rupee's decline could improve following Trump's decision to roll back his tariff proposal.

3. MPC Meet

Investors are betting on a favorable outcome from this year's first MPC meeting as Modi 3.0 prioritises boosting demand. This was quite evident in the budget as the government struck a balance between fiscal discipline and fueling consumption.

The RBI's MPC decision is set to be announced on Friday, February 7.