Global equity markets are set to experience a surge in trading sentiment as U.S. President Donald Trump announced a temporary halt on tariffs for a 90-day period, excluding China from this reprieve. This unexpected decision has ignited optimism among investors worldwide, leading to a significant rally in stock markets. Following a day of closure for Shri Mahavir Jayanti, Indian markets are anticipated to open on a high note.

Positive Market Reactions

Trump’s announcement has been a game-changer, marking a dramatic shift from the record-high tariffs previously imposed, which had triggered a downturn in global stocks. The 90-day tariff pause applies to nations that are not retaliating, and it has elicited a euphoric response across various international markets.

• In Asian markets:
  • Tokyo’s Nikkei 225 soared by 9.13%.
  • South Korea’s Kospi experienced a 6.60% uptick.
  • Hong Kong’s Hang Seng rose by 2.06%.
  • Shanghai’s SSE Composite climbed 1.16%.

European stocks mirrored this enthusiasm, trading significantly higher, while U.S. markets closed the previous day with impressive gains. The Nasdaq Composite jumped by 12.16%, the S&P 500 rose by 9.52%, and the Dow Jones Industrial Average increased by 7.87%.

Anticipated Growth in Indian Markets

According to Rakesh Mehta, Chairman of Mehta Equities, the 90-day tariff pause is a positive signal that should translate into a 3-5% gap-up opening for Indian markets. He noted that any potential adverse actions against China could ultimately benefit India.

• Key Points:
  • Indian markets may open with a sharp increase, with the Nifty expected to show a rise of around 700 points.
  • Stocks in the IT and pharmaceutical sectors, which previously faced declines due to tariff fears, are anticipated to bounce back.
  • The gap-up opening is likely to trigger widespread buying, particularly in large-cap banking and financial stocks.

Implications of Tariff Changes

While Trump’s decision provides a momentary reprieve for global markets, it has also drawn attention to the ongoing tensions with China, which is still subject to a hefty 125% tariff. This strategic decision aims to ease global economic pressures and foster improved investor sentiment.

V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, emphasizes that the recent shifts in U.S. trade policy have caused notable volatility in markets, including India. He predicts that foreign institutional investors (FIIs) will soon pivot towards Indian stocks, given the ongoing challenges faced by Chinese equities.

Future Outlook for Indian Stocks

Pranay Aggarwal, CEO of Stoxkart, shares a similar sentiment regarding the potential revival of Indian markets, driven by the positive impact of the tariff pause. However, he cautions that sectors heavily affected by tariffs, such as pharmaceuticals and seafood exports, will continue to encounter hurdles.

In summary, the unexpected tariff pause announced by President Trump has sparked a wave of optimism in global markets, with Indian benchmarks expected to follow suit. Investors are encouraged to remain vigilant as the situation unfolds, keeping an eye on sectors that may experience significant shifts in response to these developments.