Indian Market Gains: A Promising Start Fuelled by US-Japan Trade Deal Optimism

The Nifty 50 and BSE Sensex both reported early gains on Wednesday, giving the Indian stock markets a promising start to the day. The historic trade deal between the United States and Japan, which is now indicating a possible expansion of Indian market benefits throughout Asian economies, is largely responsible for this good momentum.

Key Highlights of Today’s Indian Market Gains:

• Positive Opening:
  • The Nifty 50 index commenced trading at 25,138.50, marking a gain of 77.60 points (0.31%).
  • Similarly, the BSE Sensex started strong at 82,429.66, climbing by 242.85 points (0.30%).
• Catalyst: US-Japan Trade Deal:
  • The recent US-Japan deal has been instrumental in fostering a bullish sentiment. This agreement settled tariffs on Japanese goods at 15%, a significant reduction from the previously feared 25%.
  • This favorable outcome has markedly lifted investor morale, not just in Japan but across various Asian markets, contributing to the broader Indian market gains.

Expert Perspectives on Future Indian Market Gains:

Banking and market expert Ajay Bagga emphasized how resilient Indian markets are in spite of unpredictable tariffs and low profits. He was hopeful that a comparable trade agreement between the US and India in the 15% tariff range may be made possible by the Japan pact. A move like this would act as a strong inducement for “short covering” and aid Indian markets in reaching their highest points ever recorded in September 2024. Bagga observed that the outflows of foreign portfolio investors (FPIs) were being offset by the anticipated large inflows of domestic institutional investors (DIIs).

Axis Securities’ Head of Research, Akshay Chinchalkar, offered a cautious technical view. Despite breaking beyond its initial barrier at 25,144, the Nifty was unable to close above it, which he characterized as “not a good omen.” He underlined that the Nifty must firmly close over 25,340 in order for bulls to really pick up steam. Technical resistance is still an issue for long-term advances in the Indian market, even with the US-Japan deal’s generally positive Asian indications.

A tug-of-war between bulls and bears was repeated by Vikram Kasat, Head, Advisory, PL Capital. He pointed out the Nifty’s difficulty holding above the 40HEMA, which has since dropped to 25,104. Sustaining above this level and closing above the hourly high of 25,182 could indicate a trend reversal towards higher tops and higher bottom formation. The low of 24,882 remains a crucial support level for maintaining Indian market gains.

Broader Market and Sectoral Performance:

• Mixed Trends: While the frontline indices showed gains, the broader market presented mixed trends.
  • Nifty 100 was up by 0.15%.
  • Nifty 200 gained 0.10%.
  • However, the Nifty Midcap index fell by 0.14%, and the Nifty Smallcap 100 declined by 0.33%.
• Sectoral Overview:
  • Gains: The Nifty Auto index surged by 1%, bolstered by Japanese automobile stocks. Nifty Metal gained 0.36%, and Nifty PSU Bank saw a 0.16% increase, contributing to specific Indian market gains.
  • Losses: On the other hand, the Nifty FMCG, IT, and Media indices registered losses.

Looking Ahead for Sustained Indian Market Gains:

The market is currently paying close attention to possible comparable trade agreements with other significant economies, such as the EU and India, as these might provide the world’s equities markets even more traction. All eyes are on upcoming trade developments involving India as the ramifications of the US-Japan deal are being processed. These announcements might be the next big catalyst for the surge in Indian market gains.