Markets rally on Trump’s tariff pause amid US-China trade tensions

Stocks surge on Trump’s tariff pause, Sensex up 1.87%, Nifty up 1.97%, RBI rate cut boosts market sentiment.
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Stocks surged Friday morning as global markets responded to US President Donald Trump’s announcement of a 90-day pause on new tariffs for all countries except China. The benchmark Sensex jumped 1,380.09 points (1.87 per cent) to 75,227.24, while the Nifty gained 442.15 points (1.97 per cent) to trade at 22,841.30 shortly after opening.

The relief rally follows Wednesday’s significant volatility when the Nifty closed 137 points lower and the Sensex fell 380 points. Markets were closed Thursday for a holiday, allowing Indian indices to catch up with global developments today.

“US markets breathed a sigh of relief with a stunning 8 per cent to 12 per cent rally across major indexes on Wednesday when President Trump announced a pause on the new tariffs,” said Devarsh Vakil, Head of Prime Research at HDFC Securities. “The tariff postponement followed extraordinary turbulence in the $140 trillion global bond market.”

However, the underlying trade tensions remain a concern. The US hiked tariffs on Chinese goods to 145 per cent, prompting China to retaliate with an 84 per cent tariff. US markets subsequently gave back some gains on Thursday, with major indices dropping approximately 3 per cent.

“Bond vigilantes compelled Trump’s tariff pivot,” Vakil added, suggesting financial market pressures influenced the administration’s decision to pause its aggressive trade policies.

The RBI’s recent policy actions are providing additional support to market sentiment. On Wednesday, the central bank cut the repo rate by 25 basis points to 6.0 per cent, its second consecutive reduction. “The RBI has changed the inflation forecast for 2025-26 from 4.2 per cent to 4.0 per cent, citing an improvement in the outlook for food inflation,” noted VLA Ambala, Co-Founder of Stock Market Today.

In sectoral performance, FMCG stocks outperformed on Wednesday, rising 1.72 per cent, while PSU Bank and IT indices fell by over 2 per cent. Technical analysts are monitoring key levels closely.

“Based on global market trends, our markets may open above 22800. However, if we do open above 22800, the next level of resistance will be between 23000 and 23300,” said Shrikant Chouhan, Head of Equity Research at Kotak Securities.

Among top gainers on the NSE, Adani Enterprises led with a 4.69 per cent increase, followed by Tata Steel at 4.53 per cent, Tata Motors at 4.37 per cent, Cipla at 4.20 per cent, and JSW Steel at 4.10 per cent. Asian Paint (-0.79 per cent) and Nestle India (-0.31 per cent) were the only stocks trading in negative territory.

Gold prices reached a new all-time high of $3,171.5 on Thursday as investors sought safe-haven assets amid declining dollar values and escalating trade tensions. The US Dollar Index fell to a seven-month low, hovering around 100.

“A positive outlook is expected for banking, NBFC, and housing finance stocks following the RBI’s decision,” said Vikas Jain, Head of Research at Reliance Securities. He also noted that “higher US tariffs on China may boost Indian exports to the US.”

Foreign institutional investors (FIIs) continued their selling streak for the eighth consecutive day on April 9, offloading equities worth ₹4,358 crore. However, domestic institutional investors (DIIs) maintained their buying momentum for the third day, purchasing equities worth ₹2,976 crore.

“Traders are gearing up for extreme volatility as markets react to the latest developments,” warned Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd. “The focal point remains the ongoing tariff negotiations between the Trump administration and China, driving sentiment across global equity markets.”

Technical analysts suggest Nifty could find support at 22,300, followed by 22,200 and 22,000, with resistance levels at 22,550, 22,750, and 23,000.