Markets rebound as investors hope for trade talks among nations

Indian markets rebounded sharply on Tuesday, a day after facing the worst sell-off in 10 months, due to across-the-board value buying, as Asian and European markets also witnessed a rally. Investors hoped that potential bilateral talks between various nations and the United States would quell the negative impact of the tariffs. 

Snapping a three-day downswing, the 30-share BSE Sensex rose 1,089.18 points or 1.49 per cent to settle at 74,227.08. During the day, it had climbed 2.35 per cent, almost making up for Monday’s losses. Sensex investors became richer by Rs 7.32 lakh crore on Tuesday. The 50-share NSE Nifty surged 374.25 points or 1.69 per cent to 22,535.85. Intra-day, it had risen 2.41 per cent.

Investors are now awaiting the Reserve Bank of India's interest rate decision on Wednesday. Most analysts expect a 25 basis point repo rate cut.

"Following positive global cues led by the interest of many nations to enter into bilateral agreements with the US, the domestic market witnessed a recovery. Moreover, this optimism stems from the fact that the Indian economy is more driven by local demand and low reciprocal tariff and ongoing trade negotiations with the US," said Vinod Nair, Head of Research, Geojit Investments Limited.

"Markets saw a breather after Monday's sharp decline, rebounding over 1.5 per cent in line with the recovery in global markets. Following a gap-up opening, Nifty moved in a range but maintained a positive bias throughout the session," said Ajit Mishra, SVP Research, Religare Broking Ltd.

However, Mishra warned that investors should not get carried away on the basis of a single-day upswing. "Participants are advised not to read too much into this single-day recovery, as tariff-related developments are likely to keep volatility elevated. Moreover, the upcoming outcome of the MPC's monetary policy meeting could add to the market swings, especially on the weekly expiry day. We recommend maintaining a hedged approach, focusing on stocks showing relatively higher strength," he said.

On Monday, global markets were torched as fears of economic slowdown in the United States due to Trump's tariffs, and the real possibility of further retaliatory tariff action by other nations, spooked investors worldwide.

World markets also staged a comeback on Tuesday after Monday's collapse. In Asian markets, Tokyo's Nikkei 225 index, Hong Kong's Hang Seng, Shanghai SSE Composite index and South Korea's Kospi settled in the positive territory after falling sharply on Monday. Nikkei 225 index jumped 6 per cent.

The BSE smallcap gauge surged 2.18 per cent and the midcap index jumped 1.87 per cent. All BSE sectoral indices ended higher.