Why Indian markets increased by 1% despite US pledges to impose reciprocal tariffs

Indian markets shocked everyone by recovering significantly even after Donald Trump declared that India would be subject to reciprocal tariffs starting on April 2. The Sensex and Nifty surprisingly surged more than 1 percent on Wednesday, reaching 73,730.23 and 22,337.30, respectively, after dropping 16 percent over the preceding five months.

The rebound seems to have been aided by the fact that the Indian economy is still fundamentally robust and that all of the negative news has already been taken into consideration. This confidence may eventually lead to a more widespread recovery in the battered stock market, which is fueling hopes for a comeback in large-cap companies.

US President Donald Trump has once again criticized India's high tariffs, implying that trade negotiations may not lead to New Delhi obtaining concessions on broad levies such as reciprocal tariffs, which are set to take effect on April 2.

This stern tone did not deter the Indian stock market's participants, who went on to surge and end the day with the largest increase in the previous month. Experts say the idea is not new, as the US president has been talking about tariffs for some time. "Whatever effect they may have, the markets have already taken it into account and are not surprised by it.

Notably, Wednesday saw a strong trading session in both the Asian and European markets. Even in Asia, the key indices in France and Germany were up 2.3% and 3.3%, respectively, while the Nikkei in Japan and the Hang Seng in Hong Kong were up 2.8%. Strong global market cues propelled the recovery in local indexes, and talks that the Trump administration would lift some tariffs in the face of persistent trade concerns around the world helped to boost mood. Mehta Equities' senior VP (Research), Prashanth Tapse, stated that "local factors like the February PMI index's rise, the rupee's steep decline, and the decline in crude oil prices also led to massive buying in the battered technology, real estate, and telecom shares."

Due to concerns about valuation and the slowdown in the Indian economy, many believe that the Indian markets have already experienced a significant decline in the last five months following the FPI outflow.

According to experts, domestic institutional investors (DIIs) are seeking to purchase at current levels because there is a greater consensus in the market regarding large caps trading at fair valuations at this time. In the long run, many of them find them appealing to pick. With oscillators in extremely oversold territory, a bounce was predicted for the index (Nifty), which had been circling a critical support zone between 22,000 and 21,800. We anticipate that this encouraging trend will continue in the future," stated Rajesh Bhosale, technical analyst at Angel One Ltd.

Market participants believe that there may still be some pain in the mid and small cap segments, even though the large caps may have stabilized at their current levels and may see positive momentum from these levels. However, while certain blue chips may be cheap, others may be costly, the movement will differ by stock. Consequently, investors are likely to be very particular about what they select, considering that everything has fallen,"