Indian markets bounced back on Tuesday after a major crash on Monday amid fears of a trade war due to tariffs imposed by the US on its trade partners. Tuesdays’ recovery was led by bargain hunting and a broader recovery across Asian markets.
The US markets were the first to have calmed somewhat after the shock over the tariffs announced by President Donald Trump. Soon after the US futures advances on Tuesday, Japan’s index Nikkei 225 shot up by 6 per cent.
Investors and traders in India also took an optimistic approach today, and both benchmark indexes – Sensex and Nifty – are up over 2%. At 3.30 pm, the Sensex closed at 74,227.08 while the Nifty recovered 374.25 points to end at 22,535.85.
The Nifty and Sensex had tumbled 3.2% and 3% respectively on Monday – their biggest single-day drop in 10 months – as fears of a global recession flared following new US tariffs. (Live updates)
What caused the Indian markets to rebound?
The uptick in the Indian markets came just hours after Trump said Japan would send a delegation to negotiate, boosting hopes that Washington might soften its tariff stance.
However, the US President also vowed additional 50% levies on Chinese imports, if Beijing maintains its retaliatory tariffs, capping optimism.
Experts say that the rebound was on the cards as the markets are already oversold.
“The rebound comes as no surprise as markets are oversold and remain ripe for a rebound led by tariff-agnostic companies and sectors,” said Yogesh Kansal, cofounder of online trading platform Appreciate.
While all 13 major Indian sectoral indexes traded higher, the recovery was led by IT and banking-finance stocks. Infosys, L&T, HCL Tech and Tech Mahindra were trading at least 3% higher than yesterday’s closing.
Titan also jumped 5% after the jeweller and watchmaker said standalone revenue rose 25% in the March quarter, helped by rallying gold prices.
Why did Trump impose tariffs on trade partners?
Donald Trump on April 2 announced retaliatory tariffs on all nations that US has trade dealings with. The tariffs – a minimum of 10% for all US imports, with targeted rates of up to 50% – would help the United States recapture an industrial base that he says has withered over decades of trade liberalization.
“It’s the only chance our country will have to reset the table. Because no other president would be willing to do what I’m doing, or to even go through it,” he told reporters at the White House.
When did US markets stop the slide?
All three US indexes started Monday sharply lower. But a false rumor that Trump was considering a 90-day pause on his tariffs caused the Dow and S&P 500 to shoot higher in the late morning. The White House quickly labeled as “fake news” the rumor that raised hopes Trump may let up on tariffs, causing shifts in trillions of dollars of investments.
Soon afterward, Trump dug in further, saying he may raise tariffs more against China after the world’s second-largest economy retaliated last week with its own set of tariffs against US products.
He has said he wants to bring factory jobs back to the United States, a process that could take years. Trump also says he wants to narrow trade deficits with other countries, but it’s unclear how much room for negotiation there is on the US side or among its trading partners.
Indexes swung between losses and gains Monday, partly because investors are still hoping negotiations may forestall actual implementation of the stiff duties on all imports.
