The Indian stock markets today made a spectacular comeback after the initial decline on 31 July. The BSE Sensex fell by 786 points to 80,695.15 in the morning trading. But from there it made a sharp jump of 952 points and reached 81,647.71. The Nifty also traded above 24,900, jumping from a low of 24,635 and reached Intrade High of 24,906.05.
1. Expectations of Indo-US trade dialogue
US President Donald Trump may have announced to impose 25% tariffs on India, but he also said that talks will continue with India regarding the trade agreement. The continuation of the conversation means that there is a hope of an agreement between the two countries further and the investors have breathed a sigh of relief. Expert says that Trump’s tariff announcement is part of his negotiation strategy and the final tariff rate after negotiations can be less than 25%. Experts are expecting a trade deal by mid -August.
2. Indian rupee rise
The Indian rupee rose 14 paise to 87.66 against the US dollar on Thursday. It is believed that the Reserve Bank of India (RBI) can intervene to handle the Indian rupee. This has improved the sentiment regarding the rupee. A day before this, the Indian rupee broke up to 89 paise on Wednesday, which was the biggest decline of the last three years.
3. Chances of cutting rates from US Federal Reserve
The Federal Reserve of the US has kept the interest rates stable, but there were differences between its members. Federal Reserve Vice Chair Michelle Boman and Governor Christopher Waller have advocated interest rates. However, Chairman Jerome Powell has not given any clear indication. But the markets are seeing the possibility of cutting interest rates in September from their statement. Reduction of interest rates increases liquidity in the market, which is considered positive for the stock market.
4. Crude oil prices fall
In the international market, the price of Brent crude oil declined by 0.19% and fell to $ 73.10 per barrel. Since India is a big buyer of crude oil. In such a situation, the fall in oil prices gives relief on the inflation front and also positively affect the current account deficit.
5. Strong signal from global market
Asian markets also saw a boom during trading on Thursday. Japan’s Nikkei 225 index climbed around 1.5%. Also, American equity futures were also in green mark during the Indian market time. This strengthened the risk sentiment at the global level and also supported Indian investors.
