Sensex surges 480 pts, Nifty above 25,700; US tariff ruling, 4 other factors fuel rally

India’s benchmark indices advanced on Monday after the US Supreme Court on Friday struck down President Donald Trump’s sweeping global tariffs.

The 30-stock index surged over 670 points to the day's high of 83,486 before closing the session at 83,294.66, rising by 480 points or 0.6%; meanwhile, Nifty settled 142 points higher at 25,713 level.

The market capitalisation of BSE-listed companies grew by over 2 lakh crore to Rs 469 lakh crore.


US Supreme Court’s decision to strike down President Donald Trump’s sweeping tariffs, global markets will take cues from developments following the court order.


Here's what triggered the markets today:

1) US Supreme Court ruling
The US Supreme Court’s decision to strike down President Donald Trump’s sweeping tariffs on Friday rubbed Indian stock markets in a positive way as both Nifty and Sensex widened their gains within minutes of opening.

The Liberation Day tariffs that were in play since April last year were termed illegal by SC as it noted Trump overstepped his authority.
In response, Trump imposed a global Tariff of 10% but revised it upwards to 15% on Saturday.

2) Crude Oil
Another key boost on Monday came from a sharp Morning drop in crude oil prices after reports that the US and Iran are set to hold a third round of nuclear talks, easing fears of a potential conflict. After falling by over 1% in the early trade, the prices recovered towards the equity markets' closing time.

The US WTI crude oil futures were trading at $66.15 per barrel, down by $0.33 or 0.50%, while Brent was down by $0.33 or 0.46% and traded around $71.43.

3) Rupee strength
The Indian rupee started strong, rising 19 paise to 90.75 against the US dollar in early trade. However, it slipped 0.1% to close at 90.8825. The ⁠currency had opened stronger on the back of the U.S. Supreme Court striking down President Donald Trump's emergency tariffs, but gave up gains as the session progressed.

Bankers attributed the reversal to hedging demand from importers and cautious positioning ahead of a wall of forward maturities and geopolitical tensions, Reuters reported.

They said the Reserve Bank of India's reliance on the non-deliverable forward market ⁠to manage ‌rupee volatility is now expected to weigh on the currency, with contracts worth at least $7 billion due to mature this week ⁠and more due in the weeks ahead.

Selling dollar/rupee forwards in the NDF market lets the RBI support the rupee without an immediate drain on foreign exchange reserves or domestic liquidity. However, when these contracts mature, counterparties may need to buy dollars and this puts pressure on the rupee, unless the central bank decides to roll them over.


4) Sectoral surge
Banks led the way with heavyweights HDFC Bank and ICICI Bank contributing most to the gains. Reliance Industries (RIL) was another top contributor.

Pharma and auto stocks, which are expected to benefit from lower tariffs, also witnessed buying action.

5) Global cues
Major Asian indices like Hong Kong's Hang Seng index ended with strong gains of 2.5% while Singapore's FTSE Straits Times Index settled 0.5% higher.

Meanwhile, China's Shanghai Composite was closed today on account of the Lunar New Year holiday, while Japan's Nikkei 225 was also shut because of a national holiday.

Meanwhile, frontline European indices were trading mixed around 10:18 a.m. GMT (4:04 pm). The UK's FTSE 100, Stoxx 600 and Germany's DAX fell up to 0.60% while the French CAC 40 and Spain's IBEX traded up by 0.10% and 0.70%, respectively around this time.

Indian markets started gap up, taking positive global cues as both the US and European markets had ended Friday in the green, reacting positively to the US SC decision.

All the above European indices had ended with strong gains on Friday gaining between 0.6% and 1%.