Markets rebound on US-China trade truce, cooling inflation 

Markets opened positively today as the Sensex rose 270.10 points or 0.33 per cent to 81,418.32 after opening at 81,278.49, compared to the previous close of 81,148.22. The Nifty climbed 88.80 points or 0.36 per cent to 24,667.15, up from the previous close of 24,578.35 as of 9.35 am, following yesterday’s steep sell-off.

The upward momentum stems primarily from two key developments: the US-China trade truce announced Monday and domestic retail inflation easing to a six-year low of 3.16 per cent in April. Additionally, US inflation fell to a four-year low of 2.3 per cent, raising expectations for interest rate cuts by both the Federal Reserve and the Reserve Bank of India.

“Trade war truce between USA & China lifts sentiments across the globe, lower inflation print will propel the RBI to cut rates in the forthcoming policy,” said Devarsh Vakil, Head of Prime Research at HDFC Securities.

Global markets reflected this optimism as the S&P 500 and Nasdaq closed higher for the second consecutive day. However, the Dow Jones faced pressure from UnitedHealth, which plunged 17.8 per cent after suspending its annual forecast and announcing its CEO’s departure.

Vikas Jain, Head of Research at Reliance Securities, noted, “The market is expected to open on a positive note, driven by a significant drop in domestic retail inflation to a six-year low of 3.16 per cent, along with a cooling in U.S. April inflation to a four-year low of 2.3 per cent. These developments are likely to boost investor sentiment.”

Among sectoral trends, the Defense Index continues to show strength amid geo-political tensions between India and Pakistan. Metal stocks are benefiting from improved US-China relations and the weakening US dollar. Banking stocks are gaining on rate cut expectations, while upstream oil companies are seeing positive movement as Brent crude trades above $66 per barrel.

Tata Steel emerged as the top gainer, surging 4.27 per cent to ₹155.81, followed by Shriram Finance (+3.08 per cent), Bharti Airtel (+2.48 per cent), Hindalco (+1.42 per cent), and Trent (+1.39 per cent). On the losing side, Tata Motors dropped 1.93 per cent, Hero MotoCorp fell 1.50 per cent, Cipla declined 1.34 per cent, Asian Paints decreased 1.25 per cent, and Nestle India slipped 0.51 per cent.

Foreign Institutional Investors (FIIs) sold equities worth ₹476 crore on May 13, while Domestic Institutional Investors (DIIs) continued their buying streak, purchasing equities worth ₹4,273 crore.

From a technical perspective, Shrikant Chouhan, Head of Equity Research at Kotak Securities, identified key support levels: “For traders, the levels of 24,500 and 24,450 are key support zones. If the market can trade above these levels, it may retest the range of 24,700 to 24,800.”

In commodities, gold prices recovered from yesterday’s sharp sell-off, trading near $3,255 an ounce. Manav Modi, Senior Analyst at Motilal Oswal Financial Services, explained, “Gold witnessed some rebound following yesterday’s sharp sell-off after latest US inflation data offered support for bets on interest rates this year.”

Oil markets also strengthened with Brent crude gaining 1 per cent to trade above $66 per barrel, supported by easing trade tensions and better economic outlook.

Market analysts remain cautiously optimistic but advise disciplined trading. “Given the current market dynamics, traders are advised to adopt a disciplined approach with strict risk management, focusing on short-term trading opportunities,” recommended Hardik Matalia, Derivative Analyst at Choice Broking.

Volatility has slightly decreased, with India VIX down 1.05 per cent to 18.20, suggesting some stabilization in market sentiment after yesterday’s decline.

Published on May 14, 2025