Markets rebound sharply on global optimism, cues on possibility of US trade deal

Domestic equity markets staged a strong recovery on Tuesday, erasing early losses as investor sentiment turned positive on the back of upbeat global cues and renewed hopes of an India–US trade agreement.

Investor confidence improved after US President Donald Trump said that Washington was “pretty close” to finalising a trade pact with New Delhi. He noted that the agreement would strengthen both economic and security ties, encourage investments, and boost American energy exports to India.

“We’re getting a fair deal, just a fair trade deal,” Trump said at the swearing-in of US envoy to India Sergio Gor, adding that discussions were “getting close” to completion.

Adding to the positive tone, the US Senate passed a bill on Monday to restore federal funding, signalling an end to the longest government shutdown in American history. The move is expected to provide clarity on key economic data delayed by the closure, such as the non-farm payrolls report, and guide the Federal Reserve’s upcoming policy direction.

Global markets were further buoyed by expectations of another interest rate cut by the US Federal Reserve in December. Fed Governor Stephen Miran said a 50-basis point reduction could be “appropriate,” citing easing inflation and a gradual rise in unemployment.

Asian equities mirrored the optimism, with South Korea’s Kospi, Japan’s Nikkei 225, and China’s Shanghai Composite Index all trading higher. On Wall Street, the S&P 500 jumped 1.54 per cent while the Nasdaq 100 advanced 2.20 per cent, their biggest single-day gains since May, after the Senate’s move to end the US shutdown.

“The rebound in global equities and easing crude prices have supported the domestic market recovery,” said Devarsh Vakil, Head of Prime Research at HDFC Securities.

Brent crude, the global oil benchmark, slipped 0.19 per cent to USD 63.94 per barrel. Softer crude prices typically bode well for the Indian economy by lowering import costs and helping contain inflationary pressures.

With supportive global cues and optimism surrounding a potential trade pact with the US, market analysts expect investor sentiment to remain upbeat in the near term.

With agency inputs