The Indian headline indices, Sensex and Nifty, witnessed a rebound in the opening trade on Tuesday, April 08, 2025. The domestic benchmark indices have shown some strength after a bloodbath on Dalal Street on Monday as US President Donald Trump's sharp tariff hikes sent global stock markets into a tailspin. The 30-share BSE Sensex started the session on a positive note as it jumped 875.83 points to open at 74,013.73, while Nifty was up 415.95 points at 22,446.75. The BSE Midcap and Smallcap indices gained around 2 per cent in the opening trade.
Key Reasons Behind This Sharp Rebound
One of the key reasons behind the rebound is positive global cues. Asian markets rebounded with Nikkei surging 6 per cent on Tuesday in a broad-based rally, bouncing back from a 1.5-year low reached in the previous session, as traders evaluated the robust performance of US technology stocks.
Also, experts believe that India’s comparatively lower tariffs, especially relative to other Asian economies like China, Vietnam, and Thailand, offer a distinct advantage in attracting Foreign Institutional Investors (FIIs).
"In the short term, reduced tariffs can drive higher FII inflows, boosting market sentiment and liquidity. A favorable tariff structure signals a business-friendly climate, leading to immediate foreign capital influx and increased investor confidence. Over the medium to long term, sustaining these inflows will depend on stable trade policies and investor-friendly regulations. If India maintains a predictable policy environment, lower tariffs could ensure a steady and stable stream of FII investments," said Akhil Puri, Partner, Financial Advisory, Forvis Mazars in India
Moreover, there is a positive sentiment in the market as the Reserve Bank of India (RBI) is expected to cut key interest rates by up to 25 basis points to stimulate growth amidst global challenges.
What Should Investors Do After the Bloodbath on D Street?
India's indices fell 5 per cent to 7 per cent since April 03, while export-facing industries such as Information Technology and Metals are down 10 per cent to 14 per cent. While valuations are one standard deviation below 5-year averages, Chakri Lokapriya, CIO-Equities, LGT Wealth feels that further fall is not ruled out until bilateral trade talk news between India and the US trickle out over the next several weeks.
"Accordingly, markets would be volatile as they digest news flow. Incrementally staggering purchases in domestic sectors such as financial services and consumer discretionary could be considered, depending on one's ability to put capital at risk. Investor bearishness is the highest since March 2009. Markets see-saw violently in such environments as politicians from the 10 major countries, including India, parlay, argue, or agree on mutually acceptable tariffs. It would be worth watching the spectacle from the sidelines if the risk appetite is moderate," Lokapriya said.