The Indian equity benchmarks, Sensex and Nifty, opened the week on a strong footing on Monday, buoyed by a landmark interim trade agreement between India and the United States. Positive global cues, particularly from Asian markets, and a significant return of Foreign Institutional Investors (FIIs) to the buying side provided the necessary momentum for the early trade rally.
Markets Open with Solid Gains
The 30-share BSE Sensex climbed 441.77 points, or 0.53 per cent, to touch 84,022.17 in early deals. Similarly, the broader 50-share NSE Nifty rose by 129 points, or 0.50 per cent, to reach 25,822.70. This upward movement reflects a growing confidence among investors, spurred by both domestic policy breakthroughs and a favorable international environment.
The India-US Trade Breakthrough
A primary driver for today’s optimism is the interim trade agreement reached between New Delhi and Washington. This deal effectively concludes a ten-month tariff dispute. Under the new terms, the United States has agreed to slash tariffs on various Indian goods from a steep 50 per cent to a much more manageable 18 per cent.
In exchange, India has committed to purchasing approximately $500 billion worth of American goods over the next five years. This procurement will focus heavily on high-tech sectors including energy, aviation, and defense technology. Crucially, the agreement allows India to protect its sensitive agricultural sectors, such as dairy, while integrating the nation into the “Pax Silica” initiative. This move secures India’s role in global AI supply chains and critical mineral networks.
FIIs Turn Net Buyers
Market sentiment has also been bolstered by a shift in the behavior of Foreign Institutional Investors. After a prolonged period of selling, FIIs turned net buyers, purchasing equities worth ₹1,950.77 crore in a single session last Friday. Analysts suggest that since many market participants still hold “short” positions in the derivatives segment, further gains could be triggered by short-covering.
Sectoral Performance: Winners and Laggards
The morning trade saw a diverse performance across sectoral indices. Blue-chip stocks like State Bank of India, Titan, and Reliance Industries led the gainers’ list. Other notable performers included Bharti Airtel, Adani Ports, and Tata Steel. The banking sector, in particular, is expected to remain resilient due to improving credit growth projections for the upcoming fiscal years.
However, the rally was not universal. Heavyweights such as HDFC Bank, ICICI Bank, and Infosys faced some selling pressure, appearing among the laggards. The IT sector continues to navigate the “Anthropic shock,” a term used by analysts to describe the disruptive impact of rapid AI advancements on traditional software service models.
Global Cues and the “Japan Pivot”
The domestic rally is well-supported by a sea of green across Asian markets. Japan’s Nikkei 225 hit record highs following a decisive election victory for the Liberal Democratic Party. Market experts believe that under the new leadership’s “Economic Security” policy, Japanese capital is increasingly pivoting away from China toward India. This shift is expected to manifest in substantial Foreign Direct Investment (FDI) into Indian infrastructure and technology sectors.
Elsewhere in Asia, the Shanghai Composite and Hong Kong’s Hang Seng also traded higher, tracking a strong Friday finish on Wall Street, where US indices gained over 2 per cent.
Commodity and Currency Outlook
On the commodity front, Brent crude prices softened slightly, declining 0.94 per cent to $67.41 per barrel. Lower oil prices generally act as a tailwind for the Indian economy, as they help contain imported inflation and reduce the current account deficit.
As the trading session progresses, investors will closely monitor mid-cap and small-cap stocks to see if the buying interest broadens across the wider market. For now, the combination of geopolitical alignment with the US and renewed foreign capital interest has placed the Indian markets in a position of strength.
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