Nifty, Sensex Jump Over 1% — Three Reasons Why Markets Are Up
Decreased fears of US recession, China stimulus, and strong domestic fundamentals have helped India's benchmark indices record over 1% gain in Tuesday's session.
The NSE Nifty 50 and BSE Sensex posted the best intraday gains in nearly two weeks on Tuesday. The indices rose tracking gains in Asia-Pacific stocks and overnight gains on Wall Street, and positive domestic economic data.
So far during the day, the Nifty 50 has risen 1.21% to the day's high of 22,781.40. The Sensex is up 1.25% to the day's high of 75,094.30.
As of 12:04 p.m., the Nifty 50 was trading 1.17% higher at 22,774.15, and Sensex was trading 1.22% higher at 75,072.65.
US Recession Fears Subside
Stocks in Asia and Wall Street rose as fears of a recession in the world's largest economy receded with the latest print of retail sales data. The data showed a less-than-expected increase in retail sales. However, the rise is comforting when compared with downwardly revised data in January.
Retail sales in the US rose 0.2% in February, against an expectation of a 0.6% rise for the month. Meanwhile, January's print was revised down to a 1.2% drop against the 0.9% drop reported earlier. The data also showed that US consumers are cautious as they also try to figure out how would the tariff policies impact the economy.
On Monday, the S&P 500 and Dow Jones Industrial Average ended 0.64% and 0.84% higher, respectively. The Nasdaq Composite ended 0.31% higher.
China Stimulus Plan Boosts Asia Stocks
Most markets across Asia-Pacific were trading in green in Tuesday's session as a market-friendly tone of China's leaders boosted risk-on sentiment in the region. Decreasing fears of economic slowdown in the US also supported the rally in Asian stocks.
China's state council revealed plans to provide stimulus, such as childcare subsidies and means to increase residents' income in a move to revive domestic consumption. China has been facing a persisting deflationary trend since the pandemic hit due to various reasons.
Most countries in the Asia-Pacific region conduct substantial business with China. Hence, any changes in China's economic landscape end up spilling into these countries, impacting their economies.
The sentiment was further uplifted after US President Donald Trump said Monday that China's President Xi Jinping will soon pay a visit to Washington. This development came amid an ongoing tariff war between the two countries.
As of 12:05 a.m., the CSI 300 and Nikkei 225 were trading 0.33% and 1.24% higher, respectively. The Kospi and S&P ASX 200 were trading 0.06% and 0.08% higher, respectively.
Domestic Factors
Other than global reasons, the indices gained support from domestic fundamentals. Inflation in the country fell to the lowest level in seven months. It came in at 3.61% in February compared to 3.98%, analysts were estimating. The softer print was welcomed at a time when India is taking several measures to increase consumption.
The inflation print for February also supported the expectation of further rate cuts by the Reserve Bank of India in coming months. The monetary easing will further stimulate the economy.
On the policy front, the ongoing talks between India and the US to carve out a bilateral trade deal provided some hope to the investors who were weighed down by the tariff outlook uncertainty. In case India succeeds in signing a trade deal, it will ease some of the uncertainty regarding tariffs' impacts.
