Sensex is recovering by over 1000 points from the low of the day. Has a signal from Trump via US envoy Sergio Gor only calmed the markets?

Indian stock markets saw a sharp intraday reversal on Monday after newly appointed US Ambassador to India Sergio Gor struck a conciliatory tone on India-US trade ties, easing investor jitters amid tariff threats and weeks of sustained selling. The Sensex, which had suffered losses of over 700 points in morning trade, erased all its losses within an hour and recovered from the day’s low by 1,017 points at the end of the session, while the Nifty climbed back above 25,500 as sentiment turned decisively.The Sensex had fallen as much as 715.17 points, or 0.85%, to an intraday low of 82,861.07 earlier in the session, while the Nifty 50 briefly dipped below 25,500.

The BSE Sensex rose 301.93 points, or 0.36%, to end at 83,878.17, while the NSE Nifty 50 gained 106.95 points, or 0.42%, to end the day at 25,790.25.

Comments from the ambassador cause a turnaround

Markets reacted quickly after Gor, who took over in New Delhi on Monday, signaled continuity in trade talks between the two countries and described differences as manageable within a broader strategic partnership.

“The India-US relationship is rooted in true friendship,” Gor said. “True friends may disagree, but resolve the difference.”

He confirmed that India and the United States remain “actively engaged” on trade issues, with the next round of talks expected as early as January 13. He underlined that negotiations remain on track despite disagreements over tariffs and market access.

In his brief public address, Gor also conveyed greetings from US President Donald Trump to Prime Minister Narendra Modi, saying, “Trump has conveyed his best wishes to Prime Minister Narendra Modi. Their relationship is sincere.”

PaxSilica’s announcement adds tailwind

Investor sentiment was further boosted by Gor’s announcement that India would be invited to join PaxSilica, a US-led strategic initiative aimed at building a secure and innovation-driven silicon supply chain.

“I am pleased to announce that India will be invited to join PaxSilica as a full member next month,” he said.

“I also want to share with you today a new initiative that the United States launched last month called PaxSilica. PaxSilica is a US-led strategic initiative to build a secure, prosperous and innovation-driven silicon supply chain, from critical minerals and energy inputs to advanced manufacturing, semiconductors, AI development and logistics,” Gor added.

Noting that countries already part of the initiative include Japan, South Korea, the United Kingdom and Israel, he said India’s participation would strengthen cooperation across the silicon value chain, from raw materials to advanced manufacturing and logistics.

According to Gor, PaxSilica is working with Australia, Japan, South Korea, the United Kingdom, Singapore and Israel, with a formal statement signed at the PaxSilica Summit in Washington, DC.

A statement from the US State Department said the initiative aims to reduce coercive dependencies and protect materials and capabilities fundamental to artificial intelligence. “PaxSilica is a positive-sum partnership. It is not about isolating others, but about coordinating with partners who want to remain competitive and prosperous,” a US State Department spokesperson said.

Broad-based market recovery

The relief rally extended beyond benchmarks. Bank Nifty recovered sharply and rose around 677 points, or over 1%, from the day’s low to 59,540.95. The Nifty Midcap 100 and Nifty Smallcap 100 indices also erased a significant portion of their early losses.

Export-oriented stocks, which have been under pressure after Trump’s earlier comments threatening tariffs of up to 500%, climbed to their session highs as fears of an immediate escalation eased.

The recovery was also supported by value buying after five consecutive sessions of decline last week, when markets were pressured by profit-taking, foreign fund outflows, concerns about possible additional US tariffs on Indian exports and broader geopolitical uncertainties.

Over the past five trading days, the BSE Sensex has fallen 2,185.77 points (or 2.54%) while the Nifty has fallen 645.25 points or 2.45%, underscoring how fragile sentiment had become in the run-up to Monday’s sharp reversal.

Also read | D-St investors lose Rs 18.5 lakh crore in six days as Sensex falls 2,900 points and Nifty falls 3%. What’s driving the sell-off?

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