Sensex, Nifty: Progress on US-China trade talks and cautious optimism about an India-Pakistan ceasefire after a day of calm lifted benchmark stock indices Sensex and Nifty by 2% on Monday. Risk-on trade was reinstated, as the US is expected to provide updates on the status of US-China trade talks today. Asian markets rose by up to 1 percent, boosting investor sentiment.
According to Devarsh Vakil, Head of Prime Research at HDFC Securities, "the announcement of the US-UK trade deal and reports of US and Chinese officials meeting in Switzerland over the weekend for trade discussions paved the way for broader negotiations and tariff de-escalation."
At 81,324.03, the BSE Sensex increased by 1,869.56 points, or 2.35 percent. At 24,534.50, the 50-pack Nifty was up 526.50 points, or 2.19 percent. According to the BSE market capitalization, investor wealth rose from Rs 4,16,51,538 crore on Friday to Rs 4,27,84,445.04 crore, an increase of Rs 11 lakh crore crore.
Adani Ports led the Sensex gainers, up 3.88 percent to Rs 1,357.85. Bajaj Finance, Axis Bank, NTPC, Larsen & Toubro, Bajaj Finserv, Eternal, Power Grid, and Reliance Industries all saw gains of more than 3%. Tata Steel rose 2.94 percent to 146.95 ahead of the Q4 results. The steelmaker is expected to report an 85 percent increase in net profit for the quarter despite flattish growth in sales. All eyes are on the Tata Group's European operations. Sun Pharma was the only Sensex loser.
Vakil noted that US President Donald Trump has announced that he will sign an executive order on Monday aimed at lowering medication costs. The directive would instruct HHS to compare Medicare payments for physician-administered drugs to the lowest international prices.
"If implemented, this policy will significantly reduce revenue for US pharmaceutical companies and their Indian suppliers. Indian pharmaceutical exporters will suffer losses in today's trading session," he warned.
Investor sentiment was boosted by the fact that there was no major flare up between India and Pakistan overnight.
"A thawing of the relationship between India and Pakistan is likely to trigger a massive rebound for benchmark Nifty early Monday trades, but any further violation of the ceasefire agreement by Pakistan could keep bullish sentiment fragile. The positive trade talks between the United States and China may boost global sentiment," said PFB the pre-Prashanth Tapse, Senior Vice President (Research) at Mehta Equities Ltd.
Investors would be looking for inflation data to be released on Tuesday and Wednesday, ahead of next month's credit policy.
In a note dated May 9, Nomura stated that the escalation of geopolitical tensions with Pakistan over Kashmir was unlikely to have an impact on India's growth, though there was a tail risk of a larger escalation that could have influenced investor sentiment.
