A wave of selling pressure swept across most Asia-Pacific stock markets on Thursday, leading them to diverge from Wall Street’s recent gains as investors continued to digest the nuances of US-China trade developments.
However, Indian benchmarks, the Sensex and Nifty 50, stood out as notable exceptions, rallying significantly on the back of strong domestic cues.
Major indices across the Asia-Pacific region predominantly ended the trading day in negative territory.
Japan’s benchmark Nikkei 225 fell 0.98% to close at 37,755.51, with the broader Topix index losing 0.88% to finish at 2,738.96.
Similarly, South Korea’s Kospi declined 0.73% to close at 2,621.36, while its small-cap counterpart, the Kosdaq, slipped 0.79% to 733.23.
The downward trend extended to Chinese markets, with Hong Kong’s Hang Seng index dropping 0.82% and mainland China’s CSI 300 losing 0.87%.
Even as most of the region faltered, Australia’s S&P/ASX 200 managed to eke out a gain, closing 0.22% higher at 8,297.5, bucking the wider regional sentiment.
Market analysts expressed caution despite the temporary truce in US-China tariff disputes announced earlier in the week.
“While markets have largely priced in peak tariff-related macro stress, we remain wary of a second wave of volatility, this time driven by fiscal policy uncertainty and weakening US hard data,” Citi analysts cautioned in a note.
This sentiment was reflected in US stock futures, which slipped in overnight trading even after the S&P 500 index had marked its third consecutive day of gains.
Overnight on Wall Street, the S&P 500 inched up 0.10% to 5,892.58, and the Nasdaq Composite gained 0.72% to 19,146.81, though the Dow Jones Industrial Average fell 0.21% to 42,051.06.
Sensex and Nifty defy regional gloom
In stark contrast to the broader Asian trend, Indian stock market benchmarks, the Sensex and the Nifty 50, delivered a stellar performance on Thursday, May 15.
The rally was predominantly led by gains in select heavyweight stocks, including HDFC Bank, ICICI Bank, and Reliance Industries.
The Sensex opened at 81,354.43, slightly above its previous close of 81,330.56, and then proceeded to surge an impressive 1,388 points, or 1.7 percent, to reach an intraday high of 82,718.
Similarly, the Nifty 50 successfully reclaimed the significant 25,000 mark.
After starting the day at 24,694.45 (previous close 24,666.90), the index jumped 1.8 percent to hit an intraday high of 25,116.
By the closing bell, the 30-share Sensex settled at 82,530.74, marking a substantial gain of 1,200 points, or 1.48 percent.
The Nifty 50 ended the day with an equally impressive gain of 395 points, or 1.60 percent, at 25,062.10.
While the mid and small-cap segments also participated in the rally, their gains were more modest, with the BSE Midcap index closing 0.67 percent higher and the Smallcap index rising 0.94 percent.
India’s Nifty 50 overall for the day, however, factoring in early trade before the major rally, was noted in the broader regional context as having slipped 0.16% in earlier parts of the session, highlighting the strong intraday recovery.
Unpacking India’s bullish momentum
Market experts attributed the sharp rally in Indian equities to several key factors:
- Value buying in large-caps: Observers suggested that select heavyweight stocks were attracting value buying following recent price corrections, providing a significant boost to the benchmark indices.
- Optimism around US-India trade deal: Growing positive sentiment surrounding a potential trade agreement between the US and India reportedly influenced market mood. Media reports cited US President Donald Trump claiming that India had proposed a trade deal with “no tariffs” or “zero tariffs.”
- Supportive Q4 earnings: Experts pointed out that the Q4 earnings season for Indian corporations has been largely stable thus far, underpinning investor confidence. Brokerage firm Motilal Oswal Financial Services noted that earnings for 27 Nifty companies (as of May 5) showed “a mixed but generally better-than-expected performance for Q4FY25, with year-on-year (YoY) growth of 9 per cent in sales, 6 per cent in EBITDA, 10 per cent in PBT, and 4 per cent in PAT.”
- Favorable macroeconomic outlook: India’s robust macroeconomic fundamentals continue to support underlying market sentiment. With retail inflation easing to a six-year low of 3.16 percent in April, hopes for further interest rate cuts by the Reserve Bank of India have intensified. Experts highlight “a consistent decline in inflation, rising disposable incomes, increased government spending, and falling interest rates are the key positive factors for the market.”
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