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Indian equity benchmarks are likely to open sharply higher on Friday as markets resume trading after the Mahavir Jayanti holiday; Here’s why
Indian equity benchmarks are likely to open sharply higher on Friday as markets resume trading after the Mahavir Jayanti holiday; Here’s why
Indian equity benchmarks are likely to open higher on Friday as markets resume trading after the Mahavir Jayanti holiday. The optimism is largely driven by strong global cues after US President Donald Trump announced a 90-day pause on tariffs for countries that did not retaliate against American duties.
Trump’s Tariff Freeze Ignites Global Rally
In a dramatic policy shift, Trump declared a 90-day suspension of reciprocal tariffs for over 75 countries, excluding China. Tariffs on Chinese imports were hiked to 125%. The move triggered a historic rally in U.S. markets—Dow Jones jumped nearly 3,000 points, the S&P 500 surged 9.5%, and the Nasdaq rallied over 12%, marking its second-best day ever. The global equity space heaved a sigh of relief, with the 90-day window providing space for diplomatic trade negotiations.
Gift Nifty Signals Strong Start
The Gift Nifty is trading 336.5 points higher at 22,823.5 as of 2212 IST, indicating a likely gap-up on Friday.
In the afternoon trade on Thursday, the Gift Nifty was trading higher by 810 points or 3.6% at 23,299.5. However, it came under pressure after the US markets declined amid trade war.
3 Key Reasons Why Nifty May Rally on Friday
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Tariff Relief
The temporary tariff reprieve is expected to spark a relief rally in Indian equities. It also provides India time to finalise a bilateral trade agreement with the U.S. Ministry of External Affairs Spokesperson Randhir Jaiswal confirmed ongoing negotiations for a “mutually beneficial multi-sectoral trade deal.”
Ashok Chandak, President of the India Electronics and Semiconductor Association (IESA), called the move a tactical recalibration. “It gives Indian businesses breathing space to stabilise supply chains and policymakers time to explore long-term trade solutions,” he said.
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Receding U.S. Recession Fears
Goldman Sachs has rolled back its recession forecast in response to the tariff pause. In a note cited by The Wall Street Journal, Chief Economist Jan Hatzius now expects a 0.5% GDP growth for the U.S., with recession probability at 45%.
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Strong Global Cues
Global stock markets surged after Trump’s announcement. The S&P 500 recorded a 9.52% gain—the biggest since 2008—while the Nasdaq rallied 12.16%. The Dow Jones rose 7.87% to close above 40,600.
Asian indices followed suit: Japan’s Nikkei 225 jumped 8%, Hong Kong’s Hang Seng added 3%, South Korea’s Kospi rose 6%, and the Shanghai Composite gained over 1%.
Gift Nifty was trading over 700 points higher than Wednesday’s close, pointing to a strong start for the Indian markets on Friday.
European markets also echoed the rally—EUROSTOXX 50 and DAX futures were up nearly 8% each, while FTSE futures gained 5.4%.
Ajit Mishra, SVP – Research at Religare Broking, noted, “Besides global cues, investors will monitor TCS’s Q4 earnings. Elevated India VIX levels suggest that volatility may persist.”
TCS, India’s largest IT services firm, is scheduled to report Q4 FY25 earnings later on Friday.
What Investors Say
Nilesh Shah, MD of Kotak AMC, said Indian markets could witness a significant relief rally. However, he cautioned that investors should not expect a prolonged rally based solely on the tariff news. “Markets will now shift focus to corporate earnings and macro data,” he said.
N Jay Kumar, MD of Prime Securities, remarked, “Trump’s decisions are not just difficult but nearly impossible to predict. But with an 800-point rally in Gift Nifty, short covering could push gains in metals, IT, and China +1 segments.”
Why Did Trump Backtrack on Tariffs?
The US stock market had lost $12 trillion in value. Inflation was soaring—egg prices, for example, hit $13 a dozen. Fears loomed that China could sell off US bonds, spiking yields. Rising domestic unrest and political pressure further forced Trump’s hand. Analysts caution the tariff pause may not be permanent, especially as US-China tensions remain high with a 125% tariff now levied on Chinese imports.
Where Should You Invest?
Markets may rally sharply, but caution is key. Gains are likely in IT, metals, and China +1 sectors. However, it is wise to remain cautious in auto and pharma for now.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
