Market benchmarks surge over 6% in past four days; investors' wealth rallies by Rs 25.77 lakh cr

New Delhi: Equity benchmark indices Sensex and Nifty surged more than 6 per cent in the last four trading sessions, as a temporary pause on tariffs by the US, return of foreign investors to the domestic market, and prediction of an above-normal rainfall in the upcoming southwest monsoon season lifted investors' sentiments.

Moreover, retail inflation dipping to a nearly six-year low also raised hopes for a third rate cut by the Reserve Bank of India (RBI), according to market experts.

In the last four trading days, the BSE benchmark index jumped 4,706.05 points or 6.37 per cent, and the NSE Nifty surged 1,452.5 points or 6.48 per cent.

Accordingly, investors' wealth rallied by Rs 25.77 lakh crore to Rs 4,19,60,046.14 crore (USD 4.90 trillion) in the past four days.

Stock markets are closed on Friday for 'Good Friday'.

According to Vishnu Kant Upadhyay, AVP, Research & Advisory, Master Capital Services, several factors like foreign fund inflows, temporary pause on tariffs by the US and further monetary easing by the RBI have converged to drive the recent sharp rally in the Indian markets despite global trade uncertainty.

"In the last three trading sessions, foreign portfolio investors purchased over USD 1 billion worth of Indian equities after a prolonged selling streak. Further, the announcement of a temporary pause on tariffs by the US and potential negotiations with countries also led to the relief rally," Upadhyay said.

Moreover, the RBI's 25 bps rate cut on April 9, and its shift of stance from "neutral" to "accommodative" added fresh momentum to the equity market, as investors priced in further monetary easing, he noted.

On April 9, the RBI cut interest rates for a second consecutive time. The Monetary Policy Committee (MPC), consisting of three central bank members and an equal number of external members, voted unanimously to cut the repurchase or repo rate by 25 basis points to 6 per cent.

RBI changed its policy stance to "accommodative" from "neutral", indicating the possibility of more rate cuts in future, Governor Sanjay Malhotra said, while announcing the MPC decisions.

Marketmen are also betting big on upcoming southwest monsoon as according to the India Meteorological Department, India is expected to get above-normal rainfall in the upcoming southwest monsoon season, which raised hopes for a bountiful harvest for the largely agri-based economy.

Echoing similar sentiments, Ajit Mishra – SVP, Research, Religare Broking said the rally in the domestic equities was primarily fueled by optimism surrounding the deferral of tariffs and recent exemptions on select products, raising hopes for potential negotiations that could mitigate the impact on global trade.

"As the week progressed, market participants responded positively to a slew of favorable developments, including updates on a normal monsoon, easing retail inflation -- which raised hopes for potential policy rate cuts -- and the absence of any major negative surprises from global markets," Ajit Mishra – SVP, Research, Religare Broking Ltd, said.

In the upcoming week, all eyes will be on the earnings reports, Mishra said.

Globally, any updates related to tariffs and their potential impact on world markets will remain in focus, he added.

On the domestic macroeconomic front, retail inflation dipped marginally to a nearly six-year low of 3.34 per cent in March due to decline in prices of vegetables, eggs and protein-rich items, raising hope for a third rate cut by the RBI as it remains below the median target of 4 per cent.