Sensex, Nifty: Why stock market gained today despite Wall Street selloff

Benchmark indices Sensex and Nifty recovered in Wednesday's trade after the latter fell for 10 straight sessions in a row. The gains were seen even as Wall Street tumbled overnight following China's retaliation to Trump tariffs. China imposed 15 per cent additional tariffs on a few US goods, which was deemed a fairly low response by the market participants.

Also, there were reports that Donald Trump may probably announce a compromise with Canada and Mexico as early as Wednesday. This would mean a likely roll back of his new 25 per cent tariffs on the two trading partners, CNN quoted US Commerce Secretary Howard Lutnick as saying.

Crude oil prices have fallen to near $70 a barrel level, an added positive for the market.

Sensex stood at 73,392.10, up 402.17 points or 0.55 per cent. Nifty climbed 83 points or 0.38 per cent to 22,165.65. HCL Technologies Ltd, Tech Mahindra Ltd and Mahindra & Mahindra Ltd jumped 2-3 per cent and led the Sensex gainers. Power Grid, Tata Motors, Zomato and Infosys advanced 1.7 per cent.

Beijing announced a new round of countermeasures against the latest US tariffs. They include imposing 10 per cent or 15 per cent additional tariffs on US food and agricultural imports, adding 10 more US entities onto the Unreliable Entities List, prohibiting exports of dual-use items to 15 US entities, and banning the export of gene sequencers to biotech firm Illumina.

"Based on our calculations, the newly announced retaliatory tariffs covered $22.3 billion or 13.6 per cent of China’s imports from the US in 2024, above the 8.5 per cent in the first round of retaliation. These new tariffs will take China’s average tariff rate on imports from the US to 22 per cent from 20 per cent, per our estimate. The additions to the UEL and export control list are concentrated on the military–industrial complex," Nomura said.

V K Vijayakumar of Geojit Financial Services said uncertainty unleashed by Trump tariffs is reigning supreme now, which weighed on markets and resulted in lower trading volumes.

"It would be difficult for the US to get away unscathed from the retaliatory tariffs imposed by China, Canada and Mexico. Inflation in the US will rise and the Fed will sound hawkish. A sharp correction in the US stock market is likely. This will hurt Trump’s popularity and the negative wealth effect of a sharp market correction can aggravate the growth slowdown in the US. Soon the Trump regime will realise this," he said.

Vijayakumar said it is better for investors to wait and watch for the events to unfold. Fairly valued growth stocks, particularly those focused on domestic consumption like financials, telecom etc, and exports to non-US markets like segments of autos , can be slowly accumulated for the long-term, he said.