Whalesbook
Trade Talk Assurance Sparks Market Rebound
Indian stock market indices staged a significant recovery on Monday. The comeback followed U.S. Ambassador Sergio Gor's statement confirming active trade discussions between the United States and India. Both nations are scheduled for further talks on Tuesday.
Benchmark indices, the Nifty 50 and Sensex, had shed nearly 1% during the trading session. They reversed course to close approximately 0.4% higher each. Despite this recovery, the broader market segment remained under pressure. The BSE Mid-cap index slipped 0.4%, and the BSE Small-cap index fell 0.68%.
Market Participants' Cautious Optimism
Market observers believe the assurance that discussions are progressing positively provided considerable relief, even if a swift resolution is unlikely. Pankaj Pandey, head of research at ICICI Securities, commented that while a deal is not expected soon, positive movement is sufficient for now.
Dhananjay Sinha, co-head of institutional equities at Systematix Group, echoed this sentiment, predicting a settlement but a lengthy negotiation process. He also expressed concerns about earnings growth prospects, which may not be robust despite tax and interest rate reductions.
Earnings Season and Investor Flows
As the December quarter earnings season commenced Monday, investors will scrutinize management commentary on demand, business outlook, and strategy. Aggregate earnings growth for Nifty 50 companies is projected in the mid-single digits year-on-year. Valuations offer some solace, with the Nifty 50 trading at forward PE ratios of over 18x for FY28 and 21x for FY27.
Foreign portfolio investors (FPIs) continued their net selling, offloading equities worth over ₹3,638 crore on Monday. Conversely, domestic institutional investors (DIIs) provided support, with net buying exceeding ₹5,839 crore, according to provisional BSE data. FPI net divestment in 2025 has already surpassed ₹1.65 lakh crore.