Sensex Surges 300 Pts as Trade Deal Hopes Douse Global Fears
Overview
Indian equities staged a dramatic recovery Monday, with the Sensex closing up 302 points at 83,878. The benchmark index erased an early 700-point slump driven by global uncertainty and a US Fed probe, surging on optimism surrounding a nearing India-US trade deal. Precious metals also hit new highs amidst dollar weakness.
Indian Equities Stage Dramatic Rebound
MUMBAI – The benchmark Sensex index dramatically reversed early losses on Monday, closing up 302 points at 83,878. This marked the first session of gains after five consecutive days of declines that had seen the index shed nearly 2,200 points. The turnaround was fueled by growing optimism over an impending India-US trade deal.
Early Sell-off Amidst Global Jitters
The session began on a sour note, with the Sensex plunging nearly 700 points in early trades. This initial slide was attributed to news of a criminal probe opened by the US justice department against Federal Reserve Chairman Jerome Powell. Such developments sent shockwaves through global financial markets, raising concerns about potential interest rate hikes worldwide and creating broad-based uncertainty.
Trade Deal Fuels Rebound
Investor sentiment shifted significantly during the mid-session after the US Ambassador to India indicated that a bilateral trade agreement was nearing finalization. This positive development directly counteracted the earlier global jitters, lifting the Sensex and broader market sentiment. According to Vinod Nair, Head of Research at Geojit Investments, favorable remarks on trade deals by the US Ambassador ahead of the next negotiation round provided a crucial boost.
Haven Assets Rally
The global uncertainty also spurred a rally in safe-haven assets. Gold prices surged past the $4,600 per ounce mark on the Comex in New York and traded above ₹1.4 lakh per kilogram for February futures on the MCX. Silver prices similarly climbed, exceeding $85 per ounce on the Comex and trading above ₹2.69 lakh per kilogram for February futures on the MCX.
Dollar Weakens, Rupee Firms
The US dollar weakened against major currencies, partly due to the news concerning the Fed chief and potential US intervention in Iran. The dollar index, measuring its strength against a basket of currencies, slid by approximately 0.3%. In India's interbank forex market, the rupee marginally strengthened, closing at 90.16 against the dollar, compared to 90.22 on Friday. Investors were richer by approximately ₹1 lakh crore by the close of trading, with BSE's market capitalization reaching ₹468.7 lakh crore.
