Opening Bell - Morning Commentary

Markets to digest recent gains

U.S. equity markets rose sharply to start the week, as the United States and China agreed to a 90-day pause on the escalating tariffs placed on each other and will temporarily reduce their respective levies. The two countries announced this in a rare joint statement following high-stakes trade talks over the weekend.

The Dow closed higher by 1,161 points, or 2.81%. The broader S&P 500 gained 3.26%, and the tech-heavy Nasdaq Composite surged 4.35%. The three major indexes each posted their biggest single-day gains in over one month.

Investors showed greater appetite for riskier assets, including stocks. The US dollar rose 1.4% against a basket of currencies. US oil, which had tumbled as investors feared a demand vacuum because of a tariff-induced global recession, surged 1.52% to $61.95 a barrel. Brent crude rose 1.64% to $64.96 a barrel.

Investors sold off safe-haven assets, such as gold, which tumbled 2.7%. US Treasuries also fell, sending the 10-year yield back above 4.45%. Japan’s yen fell 2% against the dollar.

The CBOE Volatility Index, Wall Street’s fear gauge, sank more than 15% to its lowest level since the end of March.

India proposed to impose retaliatory duties on U.S. products under World Trade Organisation norms in response to American tariffs on steel and aluminium, which were implemented as safeguard measures. India stated that its proposed suspension of concessions would result in an equivalent amount of duty collected from products originating in the U.S., aiming to balance the impact of the U.S. measures.

The Indian stock market skyrocketed today, logging its biggest intraday gains in the last four years. The Nifty 50 ended 3.82% higher at 24924.

Nifty surpassed the crucial resistance of 24857 and closed above it. Next resistance for the Index is seen at 25207, which happens to be a 76.4% retracement of the entire fall from 26277 to 21743. Support has now shifted upwards to 24590.

Following yesterday's stupendous rise, Indian benchmark indices will likely consolidate recent gains, while we anticipate continued buyer interest in mid-cap and small-cap stocks at lower levels.