Domestic markets are recovering after the US ambassador calms trade jitters

Mumbai: Domestic stock indices posted gains in a volatile trading session on Monday, breaking a five-day losing streak, after US Ambassador to India Sergio Gor’s assurance that the two countries will discuss trade issues on Tuesday led to an immediate rebound. Markets had fallen on heightened concerns that the US-India trade deal was stalling in the wake of a 500% tariff threat by President Donald Trump and recent comments from Commerce Secretary Howard Lutnick. The NSE Nifty rose 106.95 points or 0.4% to close at 25,790.25. The BSE Sensex climbed 301.93 points or 0.4% to end at 83,878.17. Both indices recovered almost 1.2% from their intraday lows after the diplomat’s comments prompted the liquidation of some of the bearish bets. Gor was speaking in New Delhi after arriving in the country to take charge as ambassador after being selected for the job.

Late last week, markets fell as Trump supported a bill that would allow 500% tariffs on countries that knowingly engage in the exchange of uranium and petroleum products of Russian origin. This caused the indices to lose 2.5% last week, the biggest weekly loss since September.

Anxiety meter rises by 4%
“The US ambassador’s comments gave the market some relief that both sides are actively involved in solidifying a trade deal,” said Narendra Solanki, head of fundamental research at Anand Rathi Share and Stock Brokers Ltd, reinforcing expectations of an early conclusion to trade talks.

Last week’s tariff talks had dashed hopes of an early trade deal between India and the US, which was seen as crucial for a market revival.

The momentum indicators were technically in the oversold zone and that helped the quick recovery, said Rohan Shah, technical analyst at Asit C Mehta Investment Intermediates. But the markets are still in a precarious position.

“If the index fails to resume the 26,000 level soon, Nifty is likely to resume selling pressure, with downside potential towards the 25,200-25,000 zone,” he said.

Despite market recovery, Nifty’s India Volatility Index or VIX, known as the fear gauge of the market, rose 4% to 11.37 levels on Monday, indicating traders are not confident that risks have abated.The Nifty Midcap 150 fell 0.2% and the Nifty Small-cap 250 fell 0.7%. Of the total 4,485 shares trading on the BSE, 1,468 rose and 2,837 fell at the close.

For the rest of January, the Nifty is likely to move between 25,800 and 26,400, said Apurva Sheth, head of research at Samco Securities.

“Markets are likely to remain within a range until the end of the month, guided by developments around US-India tariff and trade negotiations and the upcoming budget, as evidenced by Monday’s session,” he said. “The earnings season is expected to be in line with expectations, with no major surprises.”

Elsewhere in Asia, Japan rose 1.6%, China 1.1%, Hong Kong 1.4%, South Korea 0.8% and Taiwan 0.9%.

The pan-European index Stoxx 600 was trading flat at press time.

Foreign portfolio investors net sold shares worth Rs 3,638 crore. Domestic institutions were buyers to the tune of Rs 5,839 crore.