On March 5, the Indian stock market staged a strong rebound after a prolonged period of losses. Both benchmark indices, Nifty 50 and Sensex, surged by around 1%, with the Nifty 50 on track to snap its 10-day losing streak—a historic first. The uptrend was largely driven by gains in sectors like information technology, metals, and automobiles, offsetting losses in some of the index’s heavyweight stocks.
By 2:21 pm, the Sensex had risen by 594.24 points, or 0.81%, to 73,584.17, while the Nifty gained 212.60 points, or 0.96%, to 22,295.25. The market breadth remained strong, with 2,958 stocks advancing, 628 declining, and 70 remaining unchanged. However, analysts remain cautious about the sustainability of the rebound amid global uncertainties, particularly concerning the ongoing trade tensions and tariffs.
Key Analyst Insights
Kranthi Bathini, Director at WealthMills Securities, cautioned investors not to view the current market rally as a definitive market bottom. According to Bathini, the sentiment will only shift if the Nifty breaks above the 23,000 mark. Similarly, Shrikant Chouhan, Head of Equity Research at Kotak Securities, warned that although the market recovered from its lows, the rebound lacked strength and was heavily influenced by global market support. Structurally, Chouhan noted that the Nifty is hovering near key support zones at 22,000 and 21,800, with a close below 21,800 potentially signaling a further decline.
Global Trade Concerns and Economic Impact
The global financial markets have been rattled by the imposition of tariffs by US President Donald Trump, which have sparked retaliatory actions and raised fears of a trade war. The US recently imposed a 25% tariff on imports from Canada and Mexico, while Chinese goods now face a 20% duty. In response, China and Canada have announced tariffs on US goods, and Trump has threatened additional tariffs starting April 2, with India among the countries of concern. These developments are fueling concerns over trade disruptions and market volatility, which could impact India’s financial markets.
Furthermore, the tariffs could lead to rising inflation in the US, potentially prompting the Federal Reserve to keep interest rates higher for a prolonged period. This could dampen foreign investment in emerging markets like India, adding to the overall uncertainty.
Sectoral Performance and Stock Movements
Despite global headwinds, broader markets staged a strong rebound. The BSE Midcap and BSE Smallcap indices surged by over 2%, with all 13 major sectoral indices trading in the green. Leading sectors included Nifty Auto, Nifty IT, Nifty Energy, Nifty Metal, Nifty PSU Banks, and Nifty Realty, each rising by 2-3%. Among Nifty 50 stocks, Adani Ports, Tata Steel, M&M, and Power Grid were the top gainers, climbing 4-5%. In contrast, Bajaj Finance, HDFC Bank, and ICICI Bank were among the top laggards, slipping by 1-2%.
Notably, shares of BSE Ltd plunged by 9% following the announcement of a change in expiry dates for futures and options contracts by rival National Stock Exchange (NSE). Granules India saw a 3% drop after the US FDA issued a warning letter over issues at its Gagillapur facility. On a positive note, shares of IT firm Coforge soared by over 10% after the company announced two acquisitions, a long-term deal, and a stock split.
Outlook
The market’s current rally has brought some relief, but concerns about global trade dynamics and inflation remain. Analysts advise caution and suggest keeping an eye on key support and resistance levels, as well as monitoring developments in global trade policies.
