The BSE Sensex gained 359.93 points, or 0.47%, reaching 77,546.67, while the Nifty50 climbed 114.20 points
Tuesday, February 4, 2025, witnessed a strong opening for the Indian stock market as benchmark indices BSE Sensex and Nifty50 traded higher. Investors closely monitored the ongoing tariff-related developments in the US, which have significantly influenced global market sentiment.
The BSE Sensex gained 359.93 points, or 0.47%, reaching 77,546.67, while the Nifty50 climbed 114.20 points, or 0.49%, to 23,475.25. The broader market also reflected a bullish sentiment, with mid-cap and small-cap indices showing notable gains.
Sectoral Performance: Metals and Banks Lead Gains
Sector-wise, Nifty Metal emerged as the top-performing index, rising 2.29%, driven by a surge in metal stocks. This was followed by PSU Banks, which gained 1.78%, and Auto stocks, which climbed 1.68%. The rally in these sectors was fueled by positive earnings expectations and government policy support.
Meanwhile, Nifty IT and Oil indices also showed gains of over 1%, reflecting renewed investor interest in these segments. However, the FMCG sector remained the only laggard, falling 0.46%, as profit-booking weighed on consumer stocks.
In the broader market, the BSE MidCap index was up 1.23%, while the BSE SmallCap index gained 1.02%, signaling strong participation from retail and institutional investors.
Global Markets React to Trump’s Tariff Pause
Global markets showed mixed reactions to trade uncertainties, with investors keeping a close eye on US policy changes. After a turbulent Monday session, Asian markets rebounded on Tuesday following news that President Donald Trump had paused tariffs on Mexican imports for one month. Canada also confirmed that proposed tariffs on its exports were on hold, providing relief to investors.
In Japan, the Nikkei 225 surged 1.49%, while the Topix index gained 1.17%. South Korea’s Kospi rose 2.11%, and the small-cap Kosdaq surged 2.85%. Australia’s S&P/ASX 200 index edged up 0.42%, while Hong Kong’s Hang Seng index gained 1.4%. However, Chinese markets remained closed for the Lunar New Year holiday.
Economic Indicators Support Positive Sentiment
The Indian economy started 2025 on a strong note, with the Purchasing Managers’ Index (PMI) rising to 57.7 in January. This marked a sharp recovery from December’s 12-month low of 56.4, driven by the steepest export growth in 14 years and rising new orders. The sharp rebound in manufacturing activity has contributed to improved market sentiment.
Additionally, Chief Economic Advisor V Anantha Nageswaran stated that the recent tax cuts announced in the Union Budget have reduced demand uncertainty and boosted private sector capital formation. These factors are expected to play a crucial role in sustaining economic growth over the coming months.
Upcoming RBI Monetary Policy Decision
The Reserve Bank of India’s Monetary Policy Committee (MPC) is set to announce its interest rate decision on Friday, February 7. With the Union Budget focusing on consumption-driven growth, the RBI faces a challenging task in balancing inflation control with economic expansion.
Market participants anticipate that the central bank will maintain a cautious stance, considering global economic uncertainties and currency fluctuations. The Indian rupee has been under pressure, hitting a record low of 87.29 against the US dollar on Monday. Despite reassurances from Finance and Revenue Secretary Tuhin Kanta Pandey that the rupee is a free-floating currency, volatility in the foreign exchange market remains a key concern.
GIFT Nifty and Derivatives Market Expansion
Ahead of the market opening, GIFT Nifty futures traded at 23,532.50, up 90 points from the previous session’s close. This indicated a positive start for the Indian equity market, in line with global market recovery.
In a significant development, BSE has launched Sensex derivative contracts at the International Financial Services Centre (IFSC) in GIFT City, Gujarat. The newly introduced contracts allow 22-hour trading, providing global investors with extended market access in a tax-efficient manner. This initiative is expected to enhance liquidity and attract foreign investments into Indian markets.
Primary Market Activity: IPO Listings and Subscriptions
The primary market remains active, with multiple IPO listings and fresh issues attracting investor attention. Shares of Dr. Agarwal’s Health Care IPO are set to debut on the stock exchanges today, while in the SME segment, the Chamunda Electricals IPO has opened for subscription.
The robust participation in IPOs reflects strong investor appetite for new-age businesses, particularly in healthcare and infrastructure sectors. Analysts expect the momentum in primary markets to continue, supported by favorable policy measures and strong corporate earnings growth.
Market Outlook: Key Factors to Watch
With global and domestic factors influencing market trends, investors are focusing on several key events in the coming days. The US tariff policy, RBI’s interest rate decision, and Q3 earnings reports will shape investor sentiment and drive market movements.
In the near term, the resilience in mid-cap and small-cap stocks, along with the rebound in manufacturing activity, suggests that the Indian equity market could maintain its positive trajectory. However, currency fluctuations, global trade tensions, and sector-specific challenges remain potential risks that investors need to monitor closely.
The Indian stock market continues to exhibit strength, with Sensex and Nifty50 trading higher amid global economic uncertainties. Sectoral performances indicate broad-based gains, with metals, banking, and auto stocks leading the rally.
As the global trade landscape evolves, market participants will keep a close watch on economic indicators, corporate earnings, and central bank policies. The upcoming RBI policy decision and ongoing US tariff discussions will play a critical role in shaping market sentiment in the weeks ahead.
