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EQUITY
Key gauges end higher amid Donald Trump tariff pause
Feb-04-2025

Indian equity benchmarks witnessed a strong rally and ended with gains of over one and half percent on Tuesday, as renewed buying in select heavyweight stocks sustained the upbeat sentiment throughout the session. Besides, global sentiment improved following former U.S. President Donald Trump’s decision to pause tariffs. 

Some of the important factors in today’s trade:

Markets cheered Trump tariff pause: Traders reacted positively to US President Donald Trump's latest decision to delay imposing planned tariffs on Mexico and Canada by a month after successful negotiations with the respective leaders, allaying fears of trade war.  

Rate cut expectations from RBI: All eyes are on the outcome of the forthcoming RBI Monetary Policy Committee (MPC) meeting. The RBI is expected to cut interest rates for the first time in nearly five years on waning concerns about stubborn inflation. 

There is no concern over rupee value: Amidst the weakening rupee, Finance Secretary Tuhin Kanta Pandey said there is no concern over rupee value and the Reserve Bank of India (RBI) is managing the volatility of the local currency. He said the Indian rupee is free-float and no control or fixed rate is applicable on the currency.

India, UK to resume FTA talks from February 24: India and the UK are all set to resume the talks for the proposed free trade agreement from February 24 amid the bilateral trade between two countries is increased to $21.34 billion in 2023-24 from $20.36 billion in 2022-23.  

Global sentiment improved: European markets were trading mostly in green with investors focusing on earnings and awaiting fresh economic data this week for directional clues. Asian markets settled mostly higher as the US administration decided to temporarily freeze tariffs on Mexico and Canada, sparking optimism among investors.

Finally, the BSE Sensex rose 1397.07 points or 1.81% to 78,583.81, and the CNX Nifty was up by 378.20 points or 1.62% to 23,739.25.      

The BSE Sensex touched high and low of 78,658.59 and 77,402.37 respectively. There were 25 stocks advancing against 6 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 1.35%, while Small cap index was up by 1.20%.

The top gaining sectoral indices on the BSE were Capital Goods up by 3.42%, Industrials up by 2.59%, Energy up by 2.50%, PSU up by 2.43% and Oil & Gas up by 2.40%, while FMCG down by 0.13% was the lone losing index on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 4.76%, Adani Ports &SEZ up by 3.83%, Indusind Bank up by 3.50%, Tata Motors up by 3.38% and Reliance Industries up by 3.28%. On the flip side, Zomato down by 1.57%, Nestle down by 0.81%, Maruti Suzuki down by 0.23%, Tech Mahindra down by 0.11% and Hindustan Unilever down by 0.06% were the top losers.

Meanwhile, Crisil in its report said that the Indian economy is likely to grow at 6.5% in financial year 2025-26 (FY26), marginally higher than ongoing fiscal year which is estimated to grow at 6.4%. Crisil's outlook highlighted that while government spending will continue to support economic growth, the overall fiscal impulse will reduce as fiscal consolidation progresses. Another significant factor is the private investment which need to pick pace.

The report suggested, assuming a normal monsoon and lower crude oil prices, the lower inflation and expected rate cuts by the Reserve Bank of India (RBI) will support growth. With expectation of a normal monsoon, high base effect in food inflation, and softer global commodity prices the Consumer Price Index (CPI) inflation is likely to ease up to 4.4% in FY26 compared to 4.7% in FY25. However, due to an adverse base effect the non-food inflation might increase slightly. Moreover, global trade challenges, mainly the headwind from United States’ tariff hike, could create complications for exports.

The report also added that with controlled revenue spending while maintaining a strong focus on capital expenditure India's fiscal deficit is expected to decline to 4.8 per cent in FY25 and further to 4.4 per cent in FY26. However, due to export headwind from United States’ tariff hike the current account deficit (CAD) is expected to extend from 1% of GDP in FY25 to 1.3% in FY26. The lower crude oil prices, strong services trade balance and steady remittances will prevent the CAD from further widening.

The CNX Nifty traded in a range of 23,762.75 and 23,423.15. There were 39 stocks advancing against 12 stocks declining on the index. 

The top gainers on Nifty were Shriram Finance up by 5.65%, Larsen & Toubro up by 4.19%, Bharat Electronics up by 3.68%, Indusind Bank up by 3.68% and Adani Ports &SEZ up by 3.54%. On the flip side, Trent down by 6.44%, ITC Hotels down by 4.24%, Britannia Industries down by 1.28%, Hero MotoCorp down by 1.09% and Nestle down by 0.74% were the top losers.

European markets were trading mostly in green; France’s CAC rose 22.38 points or 0.28% to 7,877.30 and Germany’s DAX gained 8.29 points or 0.04% to 21,436.53, while UK’s FTSE 100 decreased 16.94 points or 0.2% to 8,566.62.

Asian markets settled mostly higher on Tuesday after the US halted its planned tariffs on Canada and Mexico, easing fears of a global trade war. Hong Kong shares surged as investors focus on artificial intelligence and electric vehicle shares, while shrugging off news of tit-for-tat Sino-US tariffs on each other's goods. China has placed counter tariffs on US imports that will come into effect on February 10 after President Donald Trump placed 10% levies on Chinese goods. Market in mainland China remained shut for the Lunar New Year holidays.

Asian Indices

Last Trade            

Change in Points

Change in %      

Shanghai Composite

--

--

--

Hang Seng

20,789.96

572.70

2.75

Jakarta Composite

7,073.46

43.40

0.61

KLSE Composite

1,564.56

10.93

0.70

Nikkei 225

38,798.37

278.28

0.72

Straits Times

3,823.01

-3.46

-0.09

KOSPI Composite

2,481.69

27.74

1.12

Taiwan Weighted

22,793.96

99.25

0.44
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