Equity markets opened on a positive note Monday, extending last week’s stellar performance despite looming concerns over U.S. tariffs set to take effect Tuesday.
The Sensex rose 411.15 points (0.53 per cent) to 77,316.66, while the Nifty gained 123.20 points (0.53 per cent) to 23,473.60 in early trading.
Banking stocks led the early gains with Kotak Mahindra Bank and Axis Bank rising 2.75 per cent and 2.01 per cent respectively. Infrastructure giant Larsen & Toubro advanced 1.92 per cent, while Power Grid Corporation climbed 1.80 per cent. Among losers, Titan Company fell 2.33 per cent, followed by Mahindra & Mahindra dropping 2.13 per cent.
Market sentiment improved on reports that U.S. President Donald Trump may adopt a more measured approach to tariffs than previously anticipated. “Wall Street’s positive close on Friday, along with FIIs net buying ₹7470 crore, lifted market sentiment. President Trump’s hint of tariff flexibility also acts as a catalyst,” said Prashanth Tapse, Senior VP (Research) at Mehta Equities.
However, global markets remain cautious after Trump confirmed the imposition of a 25 per cent tariff on trading partners Canada and Mexico, while doubling levies on China to 20 per cent, effective Tuesday.
“The market is expected to open on a weak note due to sharp declines in the US and Asian markets, driven by concerns over a rising trade war,” noted Vikas Jain, Head of Research at Reliance Securities.
The U.S. markets showed significant volatility with the Dow Jones and Nasdaq Composite dropping by 1.5 per cent and 2.6 per cent respectively on Monday. The CBOE Volatility Index surged to its highest level since December, reflecting heightened market anxiety.
Geopolitical tensions added to market uncertainties, with a senior U.S. defense official announcing a pause in military aid to Ukraine, while a Ukrainian drone strike on Russian territory weakened prospects for peace negotiations.
Despite global concerns, the Indian market demonstrated resilience. “The Nifty delivered an impressive 4.26 per cent gain last week, marking its strongest weekly performance since February 2021,” reported Devarsh Vakil, Head of Prime Research at HDFC Securities. The midcap and smallcap segments performed even better, with the Midcap 100 index rising 7.74 per cent and the Smallcap 100 soaring 8.64 per cent.
Technically, analysts remain optimistic about market direction. “Having surpassed the initial hurdle of the downward-sloping trend line, Nifty is facing immediate resistance at the 200 EMA of 23,400,” Vakil added. “If this hurdle is surpassed, markets could advance toward the next resistance level of 23,800 in the near term.”
Vikas Jain of Reliance Securities noted that “NIFTY-50 has gained by 4.3 per cent w-o-w with strong positive move and now on the higher side the 20 weeks average of 23,500 will be a strong resistance from current levels.” He cautioned that technical indicators suggest potential profit-booking at higher levels.
In the commodities market, gold steadied near $2,892 an ounce after advancing 1.2 per cent on Monday as investors sought safe havens amid trade concerns.
“Gold and silver saw sharp profit booking on Friday as the dollar index strengthened and investors awaited the U.S. President’s tariff announcements,” said Rahul Kalantri, VP Commodities at Mehta Equities.
Oil prices continued their decline, with Brent crude dropping to a three-month low of $71 per barrel after OPEC+ signaled plans to revive halted production. “Crude oil prices remained volatile but extended their rally for a second consecutive week, supported by fresh U.S. sanctions on Iran and OPEC+ production cuts,” Kalantri explained.
The Indian rupee appreciated to a two-and-a-half-month high of 85.97 against the U.S. dollar, supported by strong foreign capital inflows and the buoyant equity market.
The U.S. 10-Year Bond Yield fell to nearly a three-month low around 4.1 per cent, while the Dollar Index dropped below 107, driven by expectations of potential rate cuts by the Federal Reserve.
As the market navigates current uncertainties, Hardik Matalia, Derivative Analyst at Choice Broking, advised caution: “Traders are advised to exercise caution and await confirmation of price action at critical levels before initiating fresh positions.”
