Sensex jumped 4700 points, Nifty 50 above 23,800; why did Indian stock market rise for four days?

The Indian stock market has skyrocketed for the last four days, paring most losses due to Trump's tariffs. After the announcement of 90 90-day tariff pause by Trump, the Indian stock market experienced a participatory rally in all four sessions post-tariff pause announcement. In these four successive sessions, the Nifty 50 index surged from 22,399 to 23,851 — logging a 1,450-point gain. On Thursday, the 50-stock index finished 414 or 1.77% higher, logging the highest weekly rise of 4.48% since 5 February 2021. The BSE Sensex has risen from 73,847 to 78,553 in the last four sessions, logging a nearly 1,700-point gain.

Speaking on the bull run on Dalal Street, Bajaj Broking said, "Benchmark indices witnessed a strong rally during the previous week, rallying 4.5% amid firm global cues and sustained foreign fund inflows. Banking stocks were the standout performers, rallying on easing CPI data and a normal monsoon forecast, which boosted hopes of a deeper rate cut cycle by the Reserve Bank of India. US President Donald Trump announced tariff exemptions for smartphones and computers and signalled a possible pause on auto tariffs, which boosted sentiments."

Why did the Indian stock market rise for four days?

According to stock market experts, the initial rally in the Indian stock market was due to Trump's tariff pause. However, the rally was extended for four straight sessions for various other reasons, which developed post-tariff pause announcements. Those post-tariff pause developments include India-US officials' engagements in a trade deal, the possibility of an India-China trade deal, the buzz for a trend reversal in FII's investment pattern, triggers for economic reforms in India, weak US dollar, selling in the US bonds and equities, and forecast for normal monsoon in India.

Stock market rally: Top 5 reasons

When asked about the top five reasons fueling the Indian stock market for the last four straight sessions, experts attributed bulls' outperformance of bears on Dalal Street to the Indo-US trade deal, the India-China trade deal, the buzz for trend reversal in FIIs' investment pattern, economic reforms in India, and normal monsoon forecasts in India.

1] Indo-US trade deal: "The initial rally on Dalal Street was mainly due to the announcement of a 90-day pause in Trump's tariffs. However, fast developments post-pause have played an important role in the extension of Dalal Street's rally, as Indian officials are visiting the US this week to initiate trade deal talks. Later, the announcement of the US Vice President vising India amid rising US-China trade war tension has fueled hope for an Indo-US trade deal ahead of the expiry of 90 days of Trump's tariffs pause. They have a valid reason to keep their hopes alive as the one per cent reciprocal tariff imposed by the US is expected to hit the US economic growth by 0.10 per cent. So, the US is also proactive in striking a trade deal with friendly nations like India," said Avinash Gorakshkar, Head of Research at Profitmart Securities.

2] Buzz for India-China trade deal: "Out of the 10 busiest trade routes in the world, the US has a presence in eight of these 10 routes, while China has a presence in five of these 10 trade routes. India has a presence in just one out of these 10 trade routes. So, the Indian government is also initiating talks with the Chinese government to reach out for a possible India-China trade deal amid rising trade war tension between the US and China. Like the US, China is also keen to compensate for the losses due to Trump's tariffs. So, the market expects Washington-like urgency in Beijing while initiating trade deal talks with India," said Avinash Gorakshkar.

3] Economic reforms in India: "In recent years, the Indian government has become a little bit protectionist in its economic policy. After the shift in trade patterns in global merchandise, New Delhi is engaging with various captains of commerce in India, and they have suggested the Indian government open the Indian market a little bit. So, the market is expecting the next phase of economic reforms in Modi 3.0, which has fueled bulls' sentiment in the recent market rally," said Anshul Jain, Head of Research at Lakshmishree Investment and Securities.

4] Buzz for trend reversal in FIIs' investment: Pointing towards FIIs' buying, Sandeep Pandey, Founder of Basav Capital, said, "FIIs' have remained net buyers on all trade sessions last week, which is evident as weak US dollar, selling pressure ion the US bond and the US equity market has formed US investors to look at assets beyond borders. Trade war tension is very high between the US and China, so they are moving towards India. In a truncated last week, FIIs bought Indian shares worth ₹14,670 crore in the cash segment. This buying has triggered buzz for a trend reversal in FIIs' investment pattern."

5] Normal monsoon forecast in India: "The IMD has predicted above-normal monsoon, which is expected to enhance rural income and keep the inflation under control. So, the market is expecting a better GDP and economic print in upcoming quarters, leading to a better quarterly season. This could also be a reason for the market to discount the monsoon forecast in the current market scenario," said Avinash Gorakshkar of Profitmart Securities.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.