Equity benchmark surged over 1 per cent on February 4, driven by a pause in US tariff actions, strong manufacturing data and a rebound in the rupee. The domestic market rose, overcoming concerns of a global trade war, despite China imposing counter-tariffs on US imports and initiating an anti-trust probe against Google.
#GIFTNifty up 100 points
Nifty near-term range: 23,200-23,650
Expect some reversal from yesterday’s trading action as #Trump postpones #tariffs for 1 month.@Nigel__DSouza with all the cues. pic.twitter.com/yknBebky8o
— CNBC-TV18 (@CNBCTV18News) February 4, 2025
The BSE Sensex jumped 861.92 points, or 1.11 per cent, to touch an intraday high of 78,048.66, while the NSE Nifty advanced 255.55 points, or 1.09 percent, to 23,616.60. Gains in blue-chip stocks such as Tata Motors, Larsen & Toubro, Mahindra & Mahindra, Adani Ports, State Bank of India, ICICI Bank and Tata Steel also contributed to the rally.
Key Factors Driving Market Gains
1) Trump’s Tariff Pause: Investor sentiment improved after US President Donald Trump announced a temporary halt to additional tariffs on imports from Mexico and Canada. Earlier, the White House had imposed a 25 percent duty on Canadian and Mexican imports and a 10 percent levy on Chinese goods, raising fears of a global trade war. However, the delay in tariffs eased concerns, lifting markets across the globe.
2) Factory Output at Six-Month High: India’s manufacturing sector showed signs of recovery, with the HSBC India Manufacturing Purchasing Managers’ Index (PMI) rising to 57.7 in January from 56.4 in December. The data pointed to a strong pick-up in demand, complemented by a rise in GST collections, which hit a nine-month high of Rs 1.92 lakh crore in January.
Vikas Jain, Head of Research at Reliance Securities, said, “Trump’s move to delay tariffs, coupled with strong domestic data and key budget announcements such as zero tax up to Rs 12 lakh under the new tax regime, has lifted investor confidence.”
3) Rupee Recovers from Record Low: The rupee rebounded 13 paise from its all-time low closing level, trading at 86.98 against the US dollar. A decline in the US dollar index, which slipped from 109.88 to 108.74 following Trump’s tariff pause, also supported the currency.
Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “A weaker dollar and positive budget measures are encouraging domestic institutional investors (DIIs) to increase their exposure, particularly in discretionary consumption sectors.”
4) Asian Markets Join the Rally: Global cues remained supportive as major Asian indices rallied. Japan’s Nikkei 225, Hong Kong’s Hang Seng, and South Korea’s Kospi gained between 1-2 percent, reflecting improved investor sentiment worldwide.
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