The Indian stock market witnessed a remarkable turnaround on Tuesday as the Nifty 50 index snapped its longest-ever losing streak of ten consecutive sessions. This sudden reversal in market sentiment came as investors responded positively to emerging reports indicating potential relief on the global trade front. According to CNN, US Commerce Secretary Howard Lutnick suggested that President Donald Trump was likely to announce a compromise with Canada and Mexico concerning trade tariffs as early as Wednesday. If confirmed, this move could potentially roll back the newly imposed 25 percent tariffs on these two key trading partners, thereby alleviating market concerns over trade tensions.
Market Sentiment and Global Cues
Investor sentiment had been under pressure due to a combination of domestic and global factors. Concerns over inflation, rising crude oil prices, and fluctuations in the rupee had contributed to the recent market weakness. Additionally, global markets were rattled by uncertainties surrounding US-China trade negotiations, geopolitical tensions, and fears of an economic slowdown.
However, the latest reports about the US administration considering a compromise on trade tariffs provided much-needed relief to global markets, including India. The easing of trade hostilities could improve investor confidence, reduce market volatility, and encourage institutional buying. As a result, the Nifty 50 index rebounded sharply, bringing an end to its unprecedented losing streak.
Sectoral Performance and Key Market Movers
Tuesday’s recovery saw gains across multiple sectors, with heavyweight stocks leading the charge. Banking, information technology (IT), and auto stocks were among the key contributors to the market’s upward momentum. The banking sector, in particular, benefited from improved liquidity conditions and a rebound in investor confidence.
IT stocks also registered gains as positive global cues bolstered expectations of increased spending on technology services. Auto stocks, which had been under pressure due to subdued consumer demand, found some respite amid expectations of policy support and easing macroeconomic concerns.
Foreign Institutional Investment and Domestic Factors
One of the critical factors influencing the Indian stock market’s direction is the flow of foreign institutional investments (FIIs). Over the past few weeks, FIIs had been net sellers, pulling funds out of Indian equities due to global uncertainties and concerns over domestic economic policies. However, the recent market turnaround could encourage fresh FII inflows if confidence in global economic stability improves.
Domestically, investors are also closely watching corporate earnings, government policy announcements, and macroeconomic data. Any signs of policy stimulus, such as tax relief or interest rate cuts, could further support market sentiment and sustain the ongoing recovery.