Why are Indian Stocks Rallying? Know Key Reasons

The Indian stock market opened on a positive note after US President Donald Trump decided to roll back hefty tariffs on 75 countries barring China.

Sensex jumped by 1,061.26 points to open at 74,941.53, while NSE Nifty went up by 354.90 points, to start the day at 22,754.05. The rally in the equity markets helped to improve the investor sentiments after the temporary easing of global trade tensions.

On the Asian markets front, South Korea’s Kospi went down by 1.3% to 2,413.16, while Hong Kong's Hang Seng fell by 0.4% to 20,606.04.

Here are the key reasons why the Indian stock market is rallying.

1. Trump’s tariff pause

As US President Donald Trump increased tariffs on Chinese imports to 145%, the trade relation between the two countries stands to remain under pressure, economists said.

However, it’s believed that higher tariffs on China can boost Indian exports to the US.

“While intra-day volatility is expected to persist, one positive factor for India is that higher US tariffs on China may boost Indian exports to the US. Additionally, China's retaliation could trigger a shift in FIIs from China to India,” Vikas Jain, Head of Research at Reliance Securities, told PTI.

2. RBI’s repo rate cut

The Reserve Bank of India’s Monetary Policy Committee (MPC) slashed the repo rate by 25 bps for the second-consecutive time to 6%. The move ensured ample liquidity into the banking system, which thereby reduced interest rates on various financial products.

Anshul Jain, Head of Research at Lakshmishree Investment and Securities, told Mint that repo rate cut and accommodative stance” by the RBI indicates no shortage in liquidity. He added that this in turn is playing a role in the stock market rally.