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Asian markets slide, but why are Indian stocks rallying? Key reasons here
Asian shares sank Friday after US stocks gave up much of their historic gains from the day before
The Indian stock markets opened on a higher note on Friday, days after US President Donald Trump announced a 90-day postponement of reciprocal tariffs for 75 countries including India, amid an escalating trade war with China.
The BSE Sensex jumped 1,061.26 points to open at 74,941.53, while the NSE Nifty climbed 354.90 points, starting the day at 22,754.05. The sharp uptick in Indian equities reflected improved investor sentiment after the temporary easing of global trade tensions.
The sharp surge in the Indian stock indexes was witnessed amid a slump in other Asian markets.
Stock market opens higher amid US-China trade war. Live updates
Asian shares sank Friday after US stocks gave up much of their historic gains from the day before. The deepening worries over Trump’s trade war initially helped pull Japan’s Nikkei 225 share index down 5.6%, AP reported.
By mid-morning in Tokyo, it was down 4.2% at 33,148.45.
South Korea's Kospi fell 1.3% to 2,413.16. In China markets, Hong Kong's Hang Seng edged down 0.4% to 20,606.04 and Shanghai's lost 0.2% to 3,218.94.
Amid the downturn in the Asian markets, why are the Indian stocks rallying? Here are the possible reasons:-
Trump's tariff pause
On Wednesday, US President Donald Trump announced a 90-day pause on the most onerous new tariffs for every country except China.
Avinash Gorakshkar, Head of Research at Profitmart Securities, told HT's sister publication Mint that the important part in the tariff pause is the exemption for the Indian exports to the US, that fueled buying on the Dalal Street during the early morning session.
Advantage India in US-China trade war?
President Donald Trump’s tariffs on Chinese imports are now at least 145%, far above the level many economists said could decimate US-China trade.
However, it is believed that the higher tariffs on China could boost Indian exports to the US.
"While intra-day volatility is expected to persist, one positive factor for India is that higher US tariffs on China may boost Indian exports to the US. Additionally, China's retaliation could trigger a shift in FIIs from China to India," Vikas Jain, Head of Research at Reliance Securities, told PTI.
RBI repo rate cut
On Wednesday, the Reserve Bank of India slashed key interest rate by 25 basis points, for the second time in a row, to support a shuttering economy hit by reciprocal tariffs imposed by the US.
Following the rate cut, the key policy rate eased to 6 per cent providing relief to home, auto and corporate loan borrowers.
Anshul Jain, Head of Research at Lakshmishree Investment and Securities, told Mint the market estimates that the repo rate cut and “accommodative stance” by the RBI mean no liquidity shortage. Jain added that it is also playing a role in the stock market rally.
