Indian equity markets witnessed a sharp rebound on Friday as the Sensex surged over 1,400 points and the Nifty 50 jumped past the 22,800 mark, buoyed by strong global cues and a temporary halt on tariffs by the United States. This move comes as a major relief for investors amid ongoing trade tensions and volatile global markets.
The United States’ decision to pause tariffs for 90 days has been perceived as a significant positive by global investors. The move has eased immediate fears of an escalating trade war, particularly between the US and countries including India, and has provided the financial markets with a much-needed breather.
Markets in India were closed on Thursday in observance of Mahavir Jayanti, but the global optimism carried through to Friday’s session, with pre-market indicators such as Gift Nifty futures showing a substantial 2.5% jump, pointing toward a strong opening.
What Drove the Rally?
The main trigger behind the sharp upmove in the Sensex was the announcement from the US administration to temporarily halt the imposition of new tariffs for 90 days. Although the decision does not completely remove trade tensions, it has temporarily calmed investor nerves, especially in sectors heavily impacted by global trade—such as IT, pharmaceuticals, and metal stocks.
According to Justin Khoo, Senior Market Analyst at VT Markets, “The Indian stock market is reacting positively to the pause in tariffs. Gift Nifty was up over 700 points in pre-market trading, signaling optimism. If India can leverage this development to secure better trade terms with the US, the Nifty could stage a short-term recovery.”
However, Khoo also cautioned that while this is a positive sign, markets will remain sensitive to developments in US trade policy and global economic indicators.
Sensex Sectoral Performance and Stock Highlights
The gains were broad-based across sectors. The Nifty Pharma and Metal indices each jumped over 3%, while Auto, Healthcare, IT, and Financial Services also opened higher by 1–2%. The market rally lifted investor wealth sharply, with total market capitalization on the BSE increasing by over ₹6.97 lakh crore, bringing the total to ₹400.79 lakh crore.
Some notable performers included:
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Sun Pharma, which gained 5% after a US court lifted restrictions on the launch of one of its key autoimmune drugs.
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Tata Steel surged 6% following its announcement of strategic cost-saving measures in its European operations.
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Biocon rallied nearly 6% after receiving USFDA approval for a cancer drug.
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BHEL rose 2% after signing a 10-year MoU with Nuovo Pignone to work on fertiliser sector projects.
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Zomato, Samvardhana Motherson, and IndusInd Bank also saw notable gains.
Underlying Concerns: Volatility and FII Selling
Despite the relief rally in the Sensex, concerns linger. The Nifty Volatility Index (NIFVIX) soared 55.8% this week, hitting 21.43, its highest spike since March 2020. This indicates that traders are bracing for large price movements in the short term, and market sentiment remains fragile.
Adding to the caution is the ongoing foreign institutional investor (FII) selling trend. FIIs have been net sellers for eight consecutive sessions, offloading nearly $16.6 billion worth of Indian equities so far in 2025. Their continuous exit is putting pressure on domestic markets and raises doubts about the sustainability of the current rally.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, explained, “While today’s gains are encouraging, global uncertainty still looms large. Bond markets in the US have seen unusual movements, with yields rising sharply—a sign of nervousness in the financial system. Investors should remain cautious.”
Sensex Surge: Temporary Relief or Start of a New Rally?
The Sensex rally has restored short-term investor confidence, but analysts agree that it’s too early to celebrate a full market recovery. Much will depend on whether this 90-day tariff pause leads to concrete trade agreements, particularly between India and the United States.
India, for its part, is looking to accelerate trade negotiations with the US. A senior government official stated that efforts are underway to finalize trade deals that could strengthen bilateral economic ties.
In addition, investors will closely monitor corporate earnings, especially in the IT sector, which has shown signs of slowing growth due to cautious client spending and uncertainty around US trade policy.
Conclusion: What the Sensex Rally Means for Investors
The US tariff pause has given the Indian stock market a short-term boost, it doesn’t eliminate deeper concerns around global trade, capital outflows, and market volatility. The Sensex rally is a positive signal but may only be temporary unless backed by stable global policy and domestic economic strength. Investors are advised to remain vigilant, diversify portfolios, and watch upcoming economic data and trade policy developments closely.
