Volatility continued in the Indian markets with Sensex dropping over .60 per cent and Nifty plunging over .80 per cent after opening in the green on Friday morning. With PM Narendra Modi visiting the US and meeting Donald Trump, the markets had responded positively in the morning to the sentiment surrounding a possible mutually beneficial trade pact between the two democracies, only to see investors continuing to pull out.
Even as POTUS Trump asserted that India might not be spared from reciprocal tariffs, the two countries mutually agreed to conclude the first phase of an ambitious trade pact by this year. Reports stated a target of $500 billion in annual bilateral trade by the year 2030.
V.K. Vijayakumar of Geojit Financial Services weighed in, "Early indications from the Modi-Trump talks are positive from the market perspective."
"Even though Trump is unlikely to back down on reciprocal tariffs, India is treated as a friendly country and the bonhomie between the two leaders augurs well for India," Vijayakumar added.
Despite the positive market sentiment, foreign investors (FIIs) kept offloading equities in the local market. On Thursday, FIIs sold equities worth Rs 2,789.91 crore.
"The oversold market can bounce back in the near term but a sustained rally is unlikely since the FIIs continue to be in sell mode. Only a decline in the dollar and US bond yields will turn the FIIs into buyers," said Vijayakumar.
Rupee also followed the positive sentiment, appreciating 8 paise to 86.85 against the dollar in early trade. The gains, however, were undercut by FII outflows and rising crude oil prices.
