Sensex surges 1,397 points as Donald Trump 'pauses' some tariffs

MUMBAI: The 'yes-no' game involving Trump's tariffs on Canada, Mexico and China turned positive for the sensex on Tuesday and lifted it up by nearly 1,400 points after the US delayed tariffs against its neighbours by a month. Reversal in trading by foreign funds, who turned net buyers after remaining net sellers for exactly a month, also helped the rally.

After opening 500 points higher, the sensex saw a marginal dip in mid-session and then rallied to an intra-day high at 78,659 points, a gain of nearly 1,500 points over Monday's close and settled very near to the intraday high, at 78,584 points. On the NSE, the nifty also treaded a similar path and closed 378 points up at 23,739 points.

According to Prashanth Tapse of Mehta Equities, the domestic markets have been on a downward trajectory for a while and Trump's decision to review talks with Canada and Mexico on tariffs sparked a massive rally that saw all sectors end in the green. "However, volatility would intensify if there is no proper solution to the ongoing tariff war. Besides, investors will also focus on this week's RBI policy, which would indicate the monetary policy members' stance on interest rates," Tapse said.

RBI's rate-setting committee will announce its decisions on interest rates on Thursday. Among economists and analysts, expectations are high that the committee will decide to cut rates by at least 25 basis points (100bps = 1 percentage point).

In international markets, Hang Seng in Hong Kong closed 2.8% while Nikkei in Japan was up 0.7% and the Shanghai Composite was flat. In Europe, markets were mixed with FTSE in the UK was marginally down while Dax in Germany was up 0.4%. Across the Atlantic, in early US trades the Nasdaq Composite was up 1.2% while the Dow Jones index was up 0.2%.

The day's rally on Dalal Street added about Rs 6 lakh crore to investors' wealth with BSE's market capitalisation at Rs 425.5 lakh crore. Among the sensex stocks, HDFC Bank, Reliance Industries and L&T added the most to the day's gains. Among the laggards were Zomato, ITC Hotels and Nestle.

Of the 31 sensex stocks, 26 closed with gains. In the boarder market, however, the advance-decline ratio was not so skewed: There were 2,422 stocks that closed higher compared to 1,499 that closed lower.