NIFTY and SENSEX both gained by 1% today after 10 days of trending lower. Here are the top 4 key reasons favouring the market today. Nifty is rallying comfortably above the 22,300 mark. This is another key psychologically important level that it breached below during the recent correction over the past few days.
1. Reciprocal tariff dilemma
Donald Trump announced reciprocal tariffs on India and China starting April 2. However, the impact on investor sentiment seemed to be bare minimum because of two foremost reasons – First, US Commerce secretary, Howard Lutnick indicated some relief on tariffs for Mexico and Canada, during a conversation with Fox Business Network. The investors take this as a positive approach towards reduction on tensed tariffs on India. Secondly, India has a minute share of global trade which, if tariffs are levied, India is to be least impacted after it.
2. China sets GDP target of 5%
One of the key reasons why Asian markets sailed through the tariff jitters is because of the announcements made by China. In a bid to boost the economy China made various stimulus packages, and set a target of 5% for 2025.
According to Nomura, “the upward revision to 2023 GDP growth, and relatively steady growth in recent months, we have revised up our 2025 GDP growth forecast to 4.5% from 4.0%.
Also read: Stock under ₹30 hits 5% upper circuit after receiving orders from Ministry of Road Transport & Highways
3. Attractive valuation in Large Caps
After the market corrected by more than 15%, many bluechip companies have come down to attractive levels.
Motilal Oswal,in its latest report said , “The Nifty is trading at a 12-month forward P/E of 18.6x, below its long-period average (LPA) of 20.5x. Thus, we continue to remain biased toward large caps with a 76% allocation in our model portfolio. We are Overweight on Consumption, BFSI, IT, Industrials, Healthcare, and Real Estate, while we are Underweight on Oil & Gas, Cement, Automobiles, and Metals.”
4. Mid and small caps saw buying
Not only in largecaps, midcaps and smallcaps also saw buying opportunities. NIFTY smallcap 100 saw a gain of 2.96% and NIFTY Midcap 100 saw a gain of 2.42%.
Also, Rohan Shah Technical Analyst, Asit C Mehta Investment Intermediates explained that, “Indian equities staged a relief rally today after a record 10 consecutive negative closings and consecutive five months of decline. The index has multiple supports in the 21,800–22,000 zone, aligning with the 100-week EMA, an AB=CD Harmonic pattern, and a key demand zone. Additionally, breadth and momentum indicators have reached extreme oversold readings, reinforcing the rebound.
In the near-term, 21,800 remains a critical level, a breakdown below this could extend the decline towards 21,300. Conversely, if 21,800 is defended, the recovery could extend toward 22,800–23,000, which serves as the polarity resistance zone.
Written by Satyajeet Mukherjee
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