Sensex Jumps 1,750 Points, Nifty Crosses 23,000: Why is the Indian Stock Market Rising?

On Tuesday, the Indian stock market continued its upward trend for the second day in a row, opening with a strong gain. The Nifty 50 opened at 23,368 and reached an intraday high of 23,368, showing a gain of 540 points. Similarly, the Sensex opened at 76,852 and hit an intraday high of 76,907, recording a massive gain of 1,750 points. The Bank Nifty also surged nearly 1,300 points, touching 52,299.

Over the past 2 sessions, the BSE Sensex has gained over 3,000 points, the Nifty 50 has surged more than 950 points, and the Bank Nifty has gained over 2,000 points. This rally isn’t limited to just large companies — the broader market is also seeing buying interest. The BSE Small-cap index rose by about 2%, and the Mid-cap index jumped by around 1.65%.

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5 Key Reasons Behind the Rally

1. Crash in US Bond and Stock Markets

Usually, the US bond and stock markets move in opposite directions. However, after Trump implemented new tariffs, both markets crashed together, which surprised many investors and even the White House. Countries like China that had bought US bonds due to Trump’s earlier policies started selling them after the tariffs were put in place. This selling led to a crash in both the bond and stock markets.

2. Trade War Turning Into Negotiations

After Trump paused tariffs for 90 days, there’s a growing buzz that behind-the-scenes trade talks may start, and a positive outcome might be possible. The US also wants to reach deals with trade partners, especially after the fall in its own financial markets.

3. Weak US Dollar

The US dollar index has fallen below 100, a level not seen in almost 2 years. This weakness means that US assets like treasury bonds, equities, and currency are under pressure. As a result, foreign investors (FIIs) might change their strategy and start investing in Indian markets after pulling out from the US.

4. Hawkish US Fed Despite Trump’s Rate Cut Push

Since becoming the 47th US President, Donald Trump has been publicly pushing for interest rate cuts. But US Federal Reserve Chairman Jerome Powell is staying focused on fighting inflation before cutting rates. After Trump’s tariffs were implemented, inflation fears rose even more, making the Fed stick to its tough stance. So, the American economy is now moving in a different direction than Trump’s wishes, and the chance of any rate cut in the near future is low.

5. RBI’s Positive Outlook on Indian Inflation

In its recent Monetary Policy Committee (MPC) meeting, the RBI kept its inflation projection for 2025–26 at 4%, with quarter-wise estimates as follows: Q1 – 3.6%, Q2 – 3.9%, Q3 – 3.8%, and Q4 – 4.4%. RBI Governor also said that inflation risks are evenly balanced. This shows confidence in the Indian economy and is being welcomed by investors, especially as the US struggles with rising inflation. The Governor also highlighted that inflation dropped in January and February 2025, mainly because of a sharp fall in food prices.

Stay Alert to Trump-Related News

Investors should be remain cautious and monitor news related to Donald Trump and the US White House. Even though recent actions have calmed the markets, more uncertainty could arise with new sector-specific tariffs that Trump has promised. Sectors like Indian pharmaceuticals may come under pressure again if Trump’s tariff threats continue. While the bond market may have temporarily slowed Trump down, he’s unlikely to completely back away from his tariff plans.

Conclusion

The Indian stock market’s robust rally is backed by both domestic confidence and global shifts in investor sentiment. While strong buying momentum and positive economic signals are fueling the rise, investors should tread cautiously. Global uncertainties, especially related to Donald Trump’s trade policies, remain a potential risk. Staying informed and focusing on long-term fundamentals can help investors navigate the ongoing volatility.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.   

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.