Indian equity markets surged higher in Friday’s trade, with benchmark indices climbing significantly as a confluence of positive factors boosted investor sentiment.
Easing global trade tensions, a sharp drop in crude oil prices, supportive domestic auto sales figures, and record-high Goods and Services Tax (GST) collections all contributed to the bullish mood, propelling the Sensex past the 81,000 mark.
Returning to trade after a public holiday on Thursday for Maharashtra Day, the markets displayed strong momentum.
The BSE benchmark Sensex climbed 766.49 points, or 0.96 per cent, to hit 81,008 in early deals.
The NSE Nifty 50 barometer traded strongly near the 24,600 level, up 251.65 points or 1.03 per cent at 24,585.85.
Market breadth was firmly positive, with 2,307 shares advancing against 1,205 declining stocks on the BSE.
Easing trade tensions fuel global optimism
A key driver for the positive sentiment was the perception of easing global trade friction. Kranthi Bathini of WealthMills Securities noted that tensions between the US and China appeared to lessen as “both the nations expressed willingness to start trade negotiations”, as reported by Business Today.
He also highlighted comments from the US Trade Representative suggesting that trade deals with key partners, potentially including India, could be finalized within weeks, offering comfort to global markets.
This comes despite recent concerning US economic data, including a reported 0.3% contraction in Q1 GDP and signs of a cooling labor market, which have raised some global growth concerns.
Oil price slump offers relief
Adding a significant tailwind, particularly for oil-importing nations like India, was a sharp drop in global crude oil prices.
Devarsh Vakil, Head of Prime Research at HDFC Securities, informed Business Today that oil prices experienced their “most significant monthly drop in almost three and a half years,” partly attributed to signals from Saudi Arabia about potentially increasing production to gain market share.
Lower oil prices help alleviate inflationary pressures and reduce India’s import bill.
Domestic strength: auto sales and record GST
On the domestic front, monthly sales figures reported by Indian automakers for April generally met market expectations, providing reassurance about demand in the sector, with M&M highlighted as a strong performer.
Furthermore, India’s GST collection figures for April soared to an all-time high of approximately Rs 2.37 lakh crore, marking a 12.6 per cent year-on-year increase.
This record collection, the highest since the tax regime’s introduction in 2017, signals robust economic activity.
“GST revenue from domestic transactions rose 10.7 per cent to about Rs 1.9 lakh crore, while imported goods were up 20.8 per cent to Rs 46,913 crore,” noted Vakil.
India-US trade deal hopes persist
Optimism surrounding a potential bilateral trade agreement between India and the US also continues to support market sentiment.
A note from Nomura suggested India’s “relative tariff advantage will sustain” due to its potential first-mover status on a trade deal.
The two countries have already signed terms of reference outlining a roadmap for negotiations covering tariffs, non-tariff barriers, services, digital trade, and intellectual property rights, among other areas, according to news reports cited by Nomura.
Technical outlook and near-term caution
Technically, the market trend remains bullish. “Overall trend for the Nifty remains bullish, as it continues to trade above all key moving averages,” stated Vakil, placing immediate support at 24,150 and identifying the 24,450-24,500 band as a significant near-term resistance zone.
However, despite the positive momentum, some analysts advise caution.
Historically, May has shown average seasonality for the Nifty, according to JM Financial.
Adani Ports was a standout gainer among Sensex constituents, rising 6% on strong Q4 results.
Maruti Suzuki, Eternal [as per source], Tata Motors, and IndusInd Bank also saw significant gains of 2-3%.
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