The Nifty surged 500 points, or 2.19%, to close at 22,328, while the Sensex jumped 1,577 points, or 2.1%, to settle at 76,734. India’s Volatility Index (India VIX) plunged 19.8% to 16.13, indicating improved investor sentiment.
The total market capitalisation of BSE-listed companies increased by Rs 10.8 lakh crore to Rs 412.34 lakh crore.
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Key factors behind today’s rally:
1) US Tariff Exemptions
Over the weekend, the U.S. excluded smartphones, computers, and other electronics from its planned “reciprocal” tariffs, triggering a relief rally in global equities. Earlier this month, Trump had announced steep tariffs on all U.S. imports, but paused implementation for 90 days for several countries, excluding China.
2) Rally in Heavyweight Banking Stocks
Banking stocks led the market rally on Tuesday after HDFC Bank, State Bank of India and others reduced deposit rates—a move Jefferies said could ease pressure on net interest margins.Following the development, HDFC Bank and ICICI Bank rose around 3% each, while IndusInd Bank and Axis Bank jumped 6.8% and 4.2%, respectively. These four banks together added 750 points to the Sensex’s pver 1,500-point rally.
HDFC Bank cut its savings account interest rate to 2.75%, now the lowest among major private sector lenders. In comparison, ICICI Bank and Axis Bank offer 3% on savings balances below Rs 50 lakh.
3) Auto Stocks Gain on Tariff Relief Hopes
The Nifty Auto index rose 3.4%, lifted by optimism around possible tariff relief for the auto sector. Shares of component makers Samvardhana Motherson jumped 8%, while Bharat Forge and Balkrishna Industries rose over 7% each. Tata Motors also gained 4.6%, as its luxury arm Jaguar Land Rover earns a significant portion of its revenue from the U.S.
Trump said he was considering adjustments to the 25% tariffs on foreign auto and auto parts imports, citing the need to give carmakers time to shift production to the U.S.
4) Weakening Dollar
The continued slide in the U.S. dollar has boosted investor sentiment in emerging markets, including India. A weaker dollar typically leads to stronger foreign inflows into Indian equities and eases pressure on the rupee.
On Tuesday, the dollar index slipped to 99.65. This has improved the risk appetite of domestic investors and supported gains in sectors like metals, which are sensitive to currency movements.
5) Asian Markets
Indian equities also mirrored gains in global markets. U.S. Treasuries also steadied following last week’s historic selloff, helping ease global market nerves.
The pan-European STOXX 600 index rose 0.8%, led by a 2.6% surge in the autos and parts sector. Germany’s DAX gained 1.3%, Britain’s FTSE 100 added 0.8%, while France’s CAC 40 was flat amid weak earnings from LVMH.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 1%. Japan’s Nikkei rose 0.8%, with auto stocks like Toyota and Denso among the top performers.
6) Crude Impact
Oil prices traded below $65 a barrel on Tuesday, easing inflation concerns. Brent hovered around $64.7, while U.S. West Texas Intermediate was at $61.3. Lower crude prices are supportive for India, which imports most of its oil, and help ease pressure on the current account and inflation.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
