Sensex, Nifty & Trump tariffs: Why stock market is rising today

The BSE Sensex climbed over 700 points in Tuesday's trade, while the NSE barometer zipped past the psychological mark of 23,500, as the Trump administration in the US agreed to halt tariffs on Canada and Mexico. China's response to the latest hike -- an imposition of import tax on certain US imports, including 15 per cent tariff on coal and LNG -- is deemed muted, easing trade war concerns.

V K Vijayakumar of Geojit Financial Services said the decision taken by Donald Trump to temporarily freeze the tariffs on Mexico and Canada and start negotiations is a clear indication of President Trump’s strategy: Impose tariffs, negotiate and strike a deal. The same strategy is likely to be tried with China, Vijayakumar said adding that a full blown trade war would anyway be damaging for the US too.

The BSE Sensex rose 718.07 points, or 0.93 per cent, to 77,904.81. Nifty stood at 23,560.25, up 199.20 points or 0.85 per cent. Larsen & Toubro Ltd (L&T) rose 2.65 per cent to Rs 3,374.35. Tata Motors Ltd, ICICI Bank Ltd, State Bank of India and Infosys climbed up to 2.6 per cent. Mahindra & Mahindra added 1.53 per cent to Rs 3,219.80. Adani Ports, Axis Bank, IndusInd Bank and Tata Steel were other Sensex gainers

"The decline in the dollar index to 108 is a positive development. Emboldened by the excellent Budget, investors, especially DIIs, are likely to step up investment, particularly in discretionary consumption segments," he said.

On Trump tariffs, Arindam Mandal, Head of Global Equities at Marcellus Investment Managers said investors should recall that 2018's volatility created buying opportunities. "As history often rhymes, the rest of the year may present similar scenarios, warranting vigilance for potential investment openings amid economic and political developments," he said

Kotak Institutional Equities feels that the recent derating in aggregate valuation multiples may not be very useful to
evaluate the risk-reward balance in the broader markets, especially in the context of a likely sharp increase in global macroeconomic uncertainty.

"Global bond yields are already pricing in the bond market’s concerns about high fiscal deficits across countries and continued high inflation in the US," it said.