Sensex, Nifty: Progress on US-China trade deal talks and cautious optimism over the India-Pakistan ceasefire after a day of calmness lifted benchmark stock indices Sensex and Nifty 2 per cent higher on Monday. Risk-on trade was back, as the US is expected to share details on the progress of US and China trade talks today. Asian markets gained up to 1 per cent, adding to investor sentiment.
“The trade deal announcement between US and UK and reports of US and Chinese officials meeting in Switzerland on the weekend for trade discussions paved the way for broader negotiations and tariff de-escalation,” said Devarsh Vakil, Head of Prime Research at HDFC Securities.
The BSE Sensex rose 1,869.56 points, or 2.35 per cent, to 81,324.03. The 50-pack Nifty was trading at 24,534.50, up 526.50 points or 2.19 per cent. Investor wealth, as suggested by the BSE market capitalisation, rose Rs 11 lakh crore crore to Rs 4,27,84,445.04 crore from Rs 4,16,51,538 crore on Friday.
Vakil noted that the US President Donald Trump has announced that he will sign an executive order Monday aiming to lower medication costs. The directive would instruct HHS to benchmark Medicare payments for physician-administered drugs against the lowest international prices.
“If implemented, this policy would significantly reduce revenue for US pharmaceutical companies and their Indian suppliers. Indian pharmaceutical exporters will take a hit in today’s trading session,” he warned.
Investors sentiment got boost from the fact that there was no major flare up between India and Pakistan overnight. “A thawing of the relationship between India & Pakistan is likely to trigger a massive rebound for benchmark Nifty early Monday trades, but that said any fresh violation of the ceasefire deal from Pakistan could keep bullish sentiment fragile. The constructive trade talks between the US and China may further bolster global sentiment,” said PFB the pre-Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd
Investors would be eyeing inflation numbers to be released on Tuesday and Wednesday, ahead of next month’s credit policy.
In a note on May 9, Nomura had said that the flaring up of geopolitical tensions with Pakistan over Kashmir was unlikely to affect India’s growth, though there was a tail risk of a broader escalation that could have influenced investor sentiment.
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