The Indian stock market maintained its upward momentum for the third consecutive trading session on Wednesday, April 16, with major indices Sensex and Nifty 50 ending the day in green, outperforming most Asian counterparts. The Sensex climbed 0.43% to close at 77,063, while the Nifty 50 rose 0.50% to end at 23,446.

Banks Power the Rally

A significant part of the rally was attributed to bank stocks, particularly PSU banks, which have outperformed their private peers. The rise in bank shares was fuelled by expectations of an interest rate cut by the Reserve Bank of India (RBI). These hopes have been reinforced by the latest inflation data, showing retail inflation in March 2025 dropped to a multi-year low, providing room for more monetary easing.

Additionally, the Indian Meteorological Department's (IMD) prediction of an above-normal monsoon in 2025 boosted investor sentiment, particularly in rural-focused and consumer sectors. These factors helped offset weak global cues, allowing Indian indices to post strong gains.

Broader Markets Outperform

The broader market was notably strong. The Nifty Midcap 100 index ended the session with a 0.72% gain at 52,347, and the Nifty Smallcap 100 index jumped 1.09%, continuing to outperform the benchmark indices.

Several mid and small-cap stocks such as JBM Auto, Engineers India, Gujarat Mineral Development Corporation, NTPC Green Energy, and Olectra Greentech recorded gains of more than 4%, reflecting bullish interest in select counters.

Sectoral Performance

Among the sectoral indices, Nifty PSU Bank was the top gainer, ending with a 2.46% increase. This sector has been on a steady rise following the RBI's dual 25-bps rate cuts, which brought the benchmark repo rate down to 6%.

Analysts believe this dovish stance, combined with the recent Union Budget 2025–26 announcement raising the income tax exemption limit to ₹12 lakh, will stimulate credit growth in the coming quarters.

Other sectors such as FMCG, oil & gas, consumer durables, media, and realty also posted healthy gains between 0.5% to 1.7%. These gains reflect a general bullishness in domestic-oriented sectors as macroeconomic indicators remain favourable.

On the flip side, auto stocks, which had shown a brief recovery, resumed their downtrend. The Nifty Auto index slipped by 0.37%, primarily due to renewed global trade tensions. Nifty Pharma also ended in the red, losing 0.18%.

Global Trade War Concerns

Globally, markets reacted negatively to escalating tensions between the United States and China. President Donald Trump increased tariffs on Chinese products by another 100%, pushing the total to a staggering 245%, after China blocked further deliveries of Boeing jets.

In retaliation, China had earlier imposed 125% tariffs on U.S. goods and halted the export of several critical minerals. This has raised concerns globally since China controls production of 30 out of 50 critical minerals, as identified by the U.S. Geological Survey.

Meanwhile, the European Union and U.S. have made little progress in resolving their trade disputes, and Japan has initiated formal trade discussions with the U.S. starting April 16.

India’s Trade Strategy and Gold Surge

Contrary to global protectionist moves, India is moving towards trade liberalisation, signing terms of reference with the U.S. for the first phase of a bilateral trade agreement, according to India’s trade secretary.

In other asset classes, gold touched a record high of $3316 per troy ounce in today's trading session, driven by central bank buying and fears of escalating geopolitical and trade tensions. Gold has now gained 26% in 2025, making it a strong hedge against volatility.

Domestic Outlook and Earnings Season

Back home, while the market is currently buoyant, analysts remain cautious. The Q4FY25 earnings season has started on a weaker note, and while short-term momentum remains positive, the possibility of profit booking at higher levels cannot be ruled out.

Experts point out that the low CPI inflation, policy support, and favourable budget measures have kept the domestic market attractive. However, external risks like the global trade war, and weak global market sentiment, could play spoilsport if not monitored closely.

Conclusion

The Indian stock market remains resilient amid global uncertainties, powered by favourable domestic fundamentals, especially the banking sector, moderating inflation, and strong monsoon outlook. Investors, however, must stay cautious and diversified as global volatility continues to rise.

With multiple macroeconomic indicators pointing towards stability, and monetary policy expected to stay accommodative, the coming weeks could see sustained interest in mid and small-cap stocks, even as global headlines create occasional turbulence.

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