Will Sensex, Nifty 50 rally sustain as Trump’s tariffs escalate US-China trade war?

Stock market today: Following positive sentiments after Donald Trump's tariff pause for 90 days, the Indian stock market experienced a participatory rally on Friday. Among the key benchmark indices, the Nifty 50 index opened upside at 22,695 and closed at 22,828, logging an intraday gain of 429 points. The BSE Sensex opened with a significant upside gain at 74,835 and ended at 75,157, logging an intraday gain of over 1,310 points. The Bank Nifty opened with an upside gap of 50,634 and finished at 51,002, registering an intraday gain of over 762 points.  The Small-cap index surged over 3% in the broad market, while the Mid-cap index finished around 1.85% higher.

However, the question that needs to be answered is: Will this rally be sustained?

According to stock market experts, there is nothing wrong with the Indian fundamentals, but the global trigger has pressured Indian stocks. They said the market investors are under severe pressure amid inflation and economic recession fears. In that case, a one-day rally won't be enough to establish a conclusion. Analysts believe the Nifty 50 index is facing a hurdle at the 22,900 mark, and a bull trend can be assumed only when the 50-stock index breaks above 23,100 levels on a closing basis. They say the Indian stock market can't remain insulated from the escalating US-China trade war tension.

Trump's tariff pause

Speaking on Friday's rally in the Indian stock market, Sugandha Sachdeva, Founder of SS WealthStreet, said, "This rally is largely driven by the US President Donald Trump's unexpected move to delay the imposition of hefty reciprocal tariffs on all trading partners (excluding China) by 90 days. However, tariffs on autos and metals will remain intact, and a universal 10% tariff will also stay in place."

US-China trade war in focus

Pointing towards the escalating China-US trade war, Sugandha Sachdeva said, “The positive momentum lost steam on April 10 as Wall Street indices surrendered some of their gains amid intensifying trade tensions with China. In a retaliatory move, China raised tariffs on US imports to 84% from 34%, prompting President Trump to respond with a total tariff hike on Chinese goods to 145%. This escalating trade war is expected to create an economically uncertain global environment, adding volatility to financial markets worldwide.”

Investment strategy for Dalal Street investors

Unveiling stock market strategy for the Indian investors, Rahul Singh, CIO-Equities at Tata Asset Management, said, "The recent global tariff changes have added uncertainty to markets, but India is better positioned than before. The direct impact remains manageable with lower exposure to US trade and strong domestic demand. Falling global prices of crude and metals may support Indian companies by reducing input costs. Sectors like banking, pharma, and energy now offer attractive value with solid balance sheets."

On the suggestion to equity mutual funds and other asset investors, Rahul Singh said, "As the market moves from global trends to company-specific opportunities, disciplined investing in large-cap, flexi-cap, and multi-asset funds, especially those with gold exposure, can help reduce portfolio risk. While short-term volatility may continue, India's relative strength offers long-term confidence to investors."

Stock market outlook

"The upside momentum in the Nifty 50 index is likely to face resistance in the 22,900 to 23,100 zone, limiting further gains. Investors should remain cautious as the evolving global trade landscape injects uncertainty into the markets," said Sugandha Sachdeva of SS WealthStreet.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.