GIFT Nifty Points to 3% Rally as Tariff Pause Eases Global Trade Concerns

Indian Equity Markets to Witness Gap-Up Opening Post Holiday

Domestic equities are set for a robust opening on Friday, as global sentiment turned positive following US President Donald Trump’s surprise announcement of a 90-day pause on new tariffs for all countries except China. The decision, coming after intense global market volatility, has rekindled investor optimism, with the GIFT Nifty futures surging by over 800 points in early trade.

The Sensex and Nifty had closed lower in their previous session on Wednesday amid weak global cues, even as the Reserve Bank of India (RBI) implemented a second consecutive policy rate cut. However, the pause in tariffs is now expected to reverse the mood, driving a relief rally across sectors. Trading was closed on Thursday for Mahavir Jayanti, and the rebound comes at a time when investors were looking for a catalyst to restore confidence.

Highlights:

• GIFT Nifty Futures rose 810 points or 3.6% to 23,299.5 from Wednesday’s close of 22,487.

• Domestic markets remained closed on Thursday due to Mahavir Jayanti.

• The pause excludes China and retains a 10% blanket duty on most U.S. imports.

Tariff Reprieve Provides Policy Breather for India

The announcement from President Trump has significantly changed the short-term outlook for Indian trade diplomacy. The 90-day window provides India with a much-needed cushion to complete negotiations for a bilateral trade agreement (BTA) with the US. A senior official from the Ministry of External Affairs confirmed that discussions are ongoing and that both sides are working on a “mutually beneficial multi-sectoral bilateral trade agreement.”

This development comes at a critical juncture for India, as the country looks to shield itself from the ripple effects of the global trade war. Domestic industries, especially electronics and manufacturing, had expressed concerns about tariff-related disruptions. With the tariff freeze, businesses now have room to stabilize supply chains and re-align import strategies.

Highlights:

• India now has a 90-day window to finalize a partial BTA with the US.

• The Ministry of External Affairs is coordinating with other ministries to expedite negotiations.

• The tariff pause allows businesses to stabilize amid global trade tensions.

Economists Retract US Recession Predictions

A direct outcome of the tariff pause has been the significant reduction in recessionary fears, particularly in the United States. Economists at Goldman Sachs withdrew their earlier forecast of a US recession, signaling improved economic stability. The team, led by chief economist Jan Hatzius, revised their baseline forecast to a GDP growth of 0.5%, with the probability of a recession cut to 45%.

This shift in perception has triggered a wave of bullish sentiment in global markets. With recession risk receding, investor risk appetite has improved, leading to large-scale buying in both equities and commodities. The shift could also encourage capital flows back into emerging markets like India, enhancing foreign institutional investor (FII) participation in domestic equities.

Highlights:

• Goldman Sachs has withdrawn its recession forecast for the US.

• Recession probability has been lowered to 45% with projected GDP growth at 0.5%.

• Improved outlook is expected to boost capital inflows into Indian markets.

Global Indices Stage Record-Breaking Rally

International equity benchmarks soared in response to Trump’s tariff pause. The S&P 500 saw its largest single-day gain since the 2008 financial crisis, jumping 9.52%, while the Nasdaq surged 12.16%, marking its second-largest daily rise on record. The Dow Jones Industrial Average climbed 7.87%, closing above the 40,600 mark.

Asian markets mirrored the optimism. Japan’s Nikkei 225 surged 8%, the Hang Seng in Hong Kong rose 3%, South Korea’s Kospi jumped 6%, and the Shanghai Composite added over 1%. European markets also rallied with EUROSTOXX 50 futures and DAX futures up by nearly 8%, while FTSE futures posted a 5.4% gain.

Highlights:

• S&P 500 posted a 9.52% gain, its biggest since 2008.

• Nasdaq rose 12.16%, second-highest one-day gain in history.

• Major Asian and European indices rallied sharply following the announcement.

GIFT Nifty Signals Strong Domestic Rebound

Back home, the GIFT Nifty has been quick to absorb the global optimism. Trading at over 700 points higher than Wednesday’s Nifty Futures close of 22,502, the futures index indicates a likely gap-up start for domestic equities. Market experts suggest that the opening momentum could be further bolstered by company earnings and sector-specific news, especially from the IT sector.

Religare Broking’s SVP of Research, Ajit Mishra, highlighted that volatility might remain elevated due to heightened activity in global and domestic markets. Investors are also watching Tata Consultancy Services (TCS) closely, as the company is set to announce its Q4 FY25 earnings on Friday, which could act as a secondary market mover.

Highlights:

• GIFT Nifty indicates a gap-up start for Indian equities.

• Nifty Futures projected to open around 23,300 levels.

• TCS earnings results could add to market momentum.