Why Indian stock markets rallied despite Trump's reciprocal tariff threat?

India Stock Market Recovery: After enduring major losses in recent trading sessions due to uncertainty surrounding Trump’s tariffs and persistent selling by foreign institutional investors (FIIs), India’s benchmark indices, Sensex and Nifty50, found some relief on Wednesday, March 5, 2025.

 

  The Sensex surged 0.84 per cent, or 619.33 points, to 73,609.26, while the Nifty50 climbed 0.96 per cent, or 213.7 points, to 22,296.35 levels. Notably, if the Nifty closes higher today, it will break its 10-session losing streak at close.  READ: Stock Market Updates LIVE

 

On the BSE, stocks like M&M, Tata Steel, Power Grid, and Adani Ports saw gains of up to 3.5 per cent. Similarly, on the NSE, M&M, Tata Steel, Trent, and Eicher Motors led the charge with gains of up to 3.5 per cent.

 

 

Among the top contributors in terms of volume on the BSE were Kotak Mahindra Bank, M&M, Bajaj Finance, Tata Motors, and Zomato. The key index contributors on BSE included M&M, Infosys, Bharti Airtel, and Reliance Industries.

 

So, what aided the recovery in the Sensex, Nifty today?

 

The recovery in Indian markets can largely be attributed to a natural recovery after several days’ of decline, analysts said.

 

According to Ambreesh Baliga, an independent analyst, "It's essentially a pullback rally following a prolonged decline in the Indian market." 

 

The prospect of scale back of Canada and Mexico tariffs is again pointing to the fact that these are negotiating tactics and tariffs may not last long. Also, the possibility of Zelensky coming back for a compromise added to the positive sentiment.

 

On Trump tariffs, Canada’s Prime Minister, Justin Trudeau, called the move “very dumb” in direct comments to President Trump, while Mexico’s President, Claudia Sheinbaum, announced that her government would release its own countermeasures soon.

 

Ajit Mishra, SVP of research at Religare Broking said the markets are witnessing a recovery today after successfully defending the 21,800-22,000 support zone in the last two sessions. 

 

“Strength in the banking sector, along with a rebound in select heavyweights from other sectors, is driving this up move,” Mishra said.

 

On the other hand, Ravi Singh, SVP of retail research at Religare Broking said, Dow Jones and Nasdaq yesterday closed in the negative zone, so the Indian equity is unlikely to sustain these upper levels. He also mentioned that today’s movement is mainly due to buying at lower levels, but the pullback is unlikely to sustain at these levels. 

 

He further stated the long-term tariff restrictions are likely to have a negative impact on the market. 

 

Technicals

 

According to Ravi Singh, the Nifty is expected to drop back to the 21,800 level. He noted that the support level is at 21,800, while the resistance level is at 22,350 on the upside.

 

Meanwhile, Jigar S Patel, senior manager of equity research at Anand Rathi, noted that the Nifty has strong support near 22,000, supported by three key confluences. The 0.382 Fibonacci retracement of the June 2022–September 2024 rally suggests a critical retracement level where buyers may step in. 

 

Additionally, the AB=CD pattern indicates equal-leg symmetry, signaling potential price exhaustion at this level. Furthermore, the bullish Deep Crab pattern aligns with this same zone, marking a harmonic reversal area where a bounce is likely.

 

These technical factors collectively support the case for buying interest near 22,000, boosting the probability of either reversing or continuing the broader uptrend, Patel added.

 

Mishra, however, believes that traders should remain cautious and avoid getting carried away. 

 

“It’s advisable to wait for a decisive reversal signal and use the rebound as an opportunity to reduce exposure to weak sectors and stocks,” Mishra said.