Sensex Jumps 600 Points, Nifty Tops 24,900 on Trade Hopes, Global Optimism

India’s benchmark indices posted a robust rebound on Monday, June 16, 2025, reversing two consecutive sessions of losses as optimism returned to global and domestic equities. The Sensex climbed 557.24 points, or 0.69%, closing at 81,675.84, while the Nifty 50 advanced 184.05 points, or 0.74%, to end at 24,902.65. A broad-based rally across large-cap and defensive sectors, fueled by positive cues from Asian markets and optimism surrounding an imminent India–US trade deal, helped restore bullish momentum. This recovery also followed a notable drop in volatility, encouraging investors to re-enter equities ahead of key central bank meetings scheduled this week.

Renewed Optimism from Asia Lifts Global Sentiment

The Indian market uptrend was largely aligned with a broader rally across Asian equity markets, which saw a pronounced recovery in key indices such as South Korea’s Kospi, Japan’s Nikkei 225, and China’s SSE Composite. The rebound in Asia followed strong cues from US futures, which signaled stability after recent volatility. Investors responded positively to signs that central banks worldwide may adopt a more measured policy stance, especially in the face of easing inflation. In contrast, Hong Kong’s Hang Seng Index remained under pressure amid local regulatory concerns, though its impact was isolated. India’s equities, closely tied to global risk sentiment, found support from the regional optimism that suggested a potential shift from risk aversion to cautious accumulation.

Highlights:

• Major Asian indices posted gains, driving global equity sentiment upward.

• US futures also traded higher, reinforcing bullish global cues.

• Hang Seng underperformed due to region-specific concerns.

• Indian stocks reacted positively to the synchronized global recovery.

Read more : Sensex Surges Over 550 Points Nifty Nears 24,900 as IT Stocks Rally Despite Geopolitical Headwinds

Drop in India VIX Signals Calmer Investor Sentiment

The India VIX, a barometer of short-term volatility, fell by 1.84% to 14.80, reflecting reduced nervousness among market participants. This cooling of volatility followed a surge earlier last week amid geopolitical tensions and uncertainty over the US Federal Reserve’s policy trajectory. The dip in VIX is seen as a positive technical indicator, as lower volatility often corresponds with sustained uptrends in equities. Additionally, the calming of nerves ahead of crucial macroeconomic announcements suggests that investors are positioning for clarity rather than bracing for shocks. This development allowed for increased institutional participation, especially in sectors like life insurance, pharmaceuticals, and heavyweights such as ONGC and Cipla, which saw gains of up to 3%.

Highlights:

• India VIX dropped nearly 2%, indicating a decline in market fear.

• Lower volatility tends to support bullish equity trends.

• Blue-chip stocks saw renewed buying amid reduced anxiety.

• Investors are more confident heading into central bank meetings.

Trade Pact Prospects with U.S. Brighten Economic Outlook

Reports that India and the United States are nearing finalization of a long-pending bilateral trade agreement acted as a major tailwind for markets. Sources suggest that both sides are currently working on the draft text of the deal, with expectations for a formal announcement by July 8. The proposed agreement is anticipated to bolster cross-border investment, streamline tariffs on critical goods, and promote deeper cooperation in emerging technologies, particularly semiconductors and defense manufacturing. The anticipation of enhanced trade flows and policy alignment between two of the world’s largest democracies has contributed to growing market optimism, especially in export-sensitive and manufacturing-heavy sectors.

Highlights:

• India–US trade deal likely to be finalized by early July.

• Agreement expected to boost bilateral investment and tech cooperation.

• Markets view this as a geopolitical win supporting economic growth.

• Export-driven and manufacturing stocks stand to benefit significantly.

Global Central Banks in Focus: Fed and BoJ in Spotlight

Markets are now turning their attention to the US Federal Reserve’s upcoming policy meeting on June 18 and the Bank of Japan’s decision a day earlier on June 17. With recent data pointing toward a softening labor market and easing inflation in the US, investors expect the Fed to hold rates steady at 4.25–4.50%. However, Fed Chair Jerome Powell’s commentary will be scrutinized for any forward guidance on future rate moves. Meanwhile, the Bank of Japan is projected to maintain its current stance amid concerns over sluggish growth and deteriorating trade metrics. The dual central bank decisions are critical, given their potential impact on global capital flows, particularly Foreign Institutional Investor (FII) behavior in emerging markets like India.

Highlights:

• Fed expected to maintain current rate levels amid cooling inflation.

• Powell’s commentary could signal future monetary direction.

• BoJ also likely to stay on hold as growth concerns persist.

• Outcomes may influence FII flows into Indian equities.

FIIs Continue to Exit, But Domestic Participation Steady

Despite the market rebound, FIIs remained net sellers on Friday, offloading shares worth ₹1,263.52 crore, continuing their cautious approach amid global uncertainty. While this trend indicates persistent risk-off behavior among global funds, strong retail and domestic institutional participation provided a counterbalance. The resilience of India’s internal capital flows, including SIP (Systematic Investment Plan) inflows into mutual funds, is increasingly acting as a stabilizer for markets, reducing dependence on fickle FII sentiment. Analysts note that a reversal in FII selling could come after policy clarity emerges post the Fed’s meeting, especially if inflation shows signs of long-term containment.

Highlights:

• FIIs sold over ₹1,200 crore in Friday’s session.

• Domestic investors helped absorb the selling pressure.

• SIP flows and DII support continue to bolster Indian equities.

• Clarity post-Fed may prompt FII reentry into Indian markets.

Crude Oil Prices Edge Higher, Stirring Import Concerns

Crude oil prices saw a modest uptick, with Brent crude futures rising 0.73% to $74.77 per barrel. Although the movement appears moderate, it rekindles concerns for India, which imports over 85% of its crude requirements. Rising oil prices increase the trade deficit and exert pressure on the rupee, which in turn impacts inflation and corporate margins, particularly for sectors like airlines, logistics, and chemicals. While current levels remain within the manageable zone, any escalation due to geopolitical flare-ups—especially in the Middle East—could strain the macroeconomic stability that the RBI is keen to preserve post its recent 100 bps repo rate cut. Investors remain wary of further increases, especially if tensions between Israel and Iran intensify.

Highlights:

• Brent crude rose 0.73%, nearing $75 per barrel.

• Higher oil prices hurt India’s trade balance and corporate margins.

• Sensitive sectors include aviation, transport, and energy-intensive industries.

• RBI’s rate cut buffer may erode if oil spikes further due to geopolitical risks.

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