FII inflows lift markets as Sensex rebounds despite Trump tariffs

Market demonstrated remarkable resilience on Thursday, staging a robust recovery from early losses triggered by global trade tensions. The Sensex closed at 77,405.50, gaining 317 points, while the Nifty 50 settled at 23,592, up 105 points, after a volatile trading session that saw initial declines.

The day’s trading was significantly impacted by US President Donald Trump’s announcement of a 25 per cent tariff on imported automobiles and auto parts, effective April 3, which initially dampened market sentiment. This development particularly affected auto and pharmaceutical stocks. Tata Motors experienced the most significant decline at -5.47 per cent, while Sun Pharmaceutical Industries dropped by -1.40 per cent. In contrast, Hero MotoCorp managed to gain 3.13 per cent despite the challenging market conditions.

Foreign Institutional Investors (FIIs) emerged as a crucial positive catalyst, returning as net buyers after months of selling. Over the past five trading sessions, FIIs have purchased shares worth over ₹21,377 crore, signaling a significant shift in market sentiment. The Nifty’s Price-to-Earnings (P/E) ratio at 21.04 times, compared to its five-year average of 24.80 times, has made equities more attractive to investors.

Other top gainers included Bajaj Finserv with a 2.86 per cent increase, IndusInd Bank rising 2.78 per cent, NTPC up 2.64 per cent, and BPCL gaining 2.19 per cent. The broader market showed considerable strength, with the Nifty Smallcap 100 outperforming the benchmark index by gaining 1.15 per cent. The Bank Nifty index recovered from an initial gap-down opening to close at 51,576, supported by buying interest in banking and financial stocks.

The currency market remained relatively stable, with the rupee trading flat near 85.50. According to Jateen Trivedi from LKP Securities, the dollar index remained above 104.10, maintaining slight pressure on the rupee, with an expected trading range between 85.15-85.85. Gold prices showed significant movement, surging near $3,050 in Comex, with the domestic MCX Gold trading positively at ₹88,400.

Technical analysts provided cautiously optimistic views. Rupak De from LKP Securities suggested the Nifty might move towards 23,800 if it sustains above 23,600, with support at 23,400. Nandish Shah from HDFC Securities highlighted that market indicators and oscillators remain robust, suggesting a potential continuation of the uptrend.

Shrikant Chouhan from Kotak Securities observed that “Technically, after a muted open, the market bounced back sharply” with the key support zone at 23,400/77,100.

The market’s resilience was further underscored by the continued interest in midcap and smallcap stocks, with both indices closing in the green. As Hrishikesh Yedve from Asit C. Mehta Investment Intermediates noted, the volatility index cooled off by 1.26 per cent to 13.30, “indicating a decline in market volatility.”

Sector performance was mixed, with PSU Banks, Media, Oil & Gas, and Realty leading gains, while Automobile and Pharma sectors remained under pressure. The market’s advance-decline ratio stood at 0.72 on the BSE, with 1,699 advances against 2,349 declines. As global uncertainties persist, investors are closely monitoring upcoming developments, including the US-India trade meeting and potential impacts of international trade policies on domestic markets.

The market’s resilience was further underscored by the continued interest in midcap and smallcap stocks, with both indices closing in the green. Despite initial concerns about global trade tensions and tariff announcements, the Indian market demonstrated its ability to recover and maintain investor confidence.