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Indian benchmark indices surged on Tuesday, tracking gains in Asian markets after the US paused planned tariffs on Canada and Mexico
Stock Market 2025 Live Updates: Why is market rising today?
Stock Market Rally: Benchmark equity indices BSE Sensex and NSE Nifty50 both closed with gains of over one per cent on Tuesday. The benchmark BSE Sensex surged by 1,467.75 points, or 1.90%, reaching 78,654.49, while the broader Nifty50 rose by 394.05 points, or 1.69%, to 23,755.10 at 3:06 pm, marking an intraday high.
The market capitalization of BSE-listed companies increased by Rs 3.4 lakh crore, reaching Rs 423.70 lakh crore.
After reaching an intraday high of 78,658.59, the 30-share Sensex ended at 78,583.81, gaining 1,397.07 points or 1.81% from its previous close.
Similarly, the NSE Nifty50 finished at 23,739.25, up 387.20 points or 1.62%. The index traded between 23,762.75 and 23,423.15 during the day.
Key Reasons Why Market Is Rising Today
US Pauses Tariffs on Mexico and Canada
US President Donald Trump’s tariff policies have been a significant factor affecting global stock market sentiment. However, the Trump administration recently paused the proposed tariffs on Canada and Mexico, which has helped lift market sentiment.
“After the global equity market sell-off yesterday, today brings positive signals. Trump’s decision to temporarily freeze tariffs on Mexico and Canada and initiate negotiations suggests a strategy: impose tariffs, then negotiate a deal,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
“This strategy may also be applied to China. A full-blown trade war would also harm the US,” Vijayakumar added.
Declining Dollar
The dollar index, which tracks the greenback against a basket of currencies, fell by 0.56% to 108.90. The euro dropped 0.67% to $1.0293. This decline follows the suspension of tariffs on key trading partners and data showing a recovery in US manufacturing activity, reinforcing expectations that the Federal Reserve may not cut rates in March.
The Indian rupee strengthened on Tuesday, buoyed by the dollar’s drop after Trump delayed tariffs on Canada and Mexico. Vijayakumar highlighted that the decline in the dollar index is a positive development for India, with investors, particularly DIIs, expected to increase investments in discretionary consumption sectors.
Positive Global Sentiment Boosts Markets
Positive global sentiment, triggered by changes in US trade policy, spilled over into the domestic market, lifting investor confidence. Key Asian indices, including Japan’s Nikkei, Korea’s Kospi, and Hong Kong’s Hang Seng, each surged by more than 1%.
RBI MPC: Rate Cut Hopes Build
The Reserve Bank of India’s Monetary Policy Committee (MPC) meeting is scheduled for February 5-7, with high expectations of a 25 basis point rate cut. Rahul Bajoria, Economist at BofAS India, believes that both growth and inflation data suggest the need for easing monetary conditions. Bajoria anticipates a 25 basis point cut in the repo rate to 6.25%, along with possible actions like a reduction in the Cash Reserve Ratio (CRR) or substantial bond purchases.
Auto Sector Rally
Shares of automobile manufacturers surged after strong sales growth in January, signaling sustained demand in the automotive sector. The Nifty Auto index climbed 1.8%, with 14 out of 15 constituents advancing. The government’s push to increase farm productivity and expand credit access is expected to boost demand for tractors, farm equipment, and entry-level two-wheelers. Additionally, the increase in the income tax exemption limit under the new regime is expected to stimulate demand for budget-friendly cars.
“Emboldened by the excellent Budget, investors, particularly DIIs, are likely to increase investments in sectors like cars, scooters, motorcycles, white goods, and food delivery businesses,” said Dr. V K Vijayakumar.
Maruti Suzuki posted record sales in January 2025, with 212,251 units sold, while Eicher Motors saw a 20% rise in motorcycle sales. Hero MotoCorp also posted a 2.13% increase in total sales, with exports surging 141%.
Buying the Dip
Twelve out of the 13 major domestic sectors opened higher, with small- and mid-cap stocks climbing 1% each, as investors seized buying opportunities after recent market declines.
In the 30-share blue-chip index, companies like Infosys, Tata Motors, Larsen & Toubro, and Tata Steel led the gains. Meanwhile, Power Grid, Hindustan Unilever, Nestle, and Asian Paints lagged.
Anand James, Chief Market Strategist at Geojit Financial Services, noted, “Despite several downside attempts, the downside marker at 23,190 held firm, encouraging us not to change our stance. We are still focused on targets between 23,700-23,840, with 23,440 acting as resistance.”