Indices rebound as India-EU trade deal boosts sentiment

Equity benchmark indices Sensex and Nifty ended higher in highly volatile trade on Tuesday, buoyed by heavy buying in bank and metal stocks, a firm trend in global markets and optimism over India-EU FTA. However, muted corporate earnings growth and continued flight of foreign capital from Indian equities restricted the gains, traders said.

The 30-share BSE Sensex climbed 319.78 points, or 0.39 per cent, to settle at 81,857.48. During the day, it hit a high of 82,084.92 and a low of 81,088.59. The 50-share NSE Nifty surged 126.75 points or 0.51 per cent to end at 25,175.40. Ponmudi R, CEO, Enrich Money, an online trading and wealth tech firm, said: “India’s FTA with the EU, which accounts for 25 per cent of global GDP and 33 per cent of global trade, is a major breakthrough, particularly in the context of the prolonged India-US trade deal.”

Ponmudi further added: “Indian equities continued to trade with a measured and cautious undertone. The finalisation of the India-European Union bilateral trade agreement lent some support to investor sentiment amid a broader risk-off environment triggered by US tariff measures.

“However, sustained selling by foreign portfolio investors and muted third-quarter corporate earnings growth capped any meaningful upside in domestic equities.”

From the 30-Sensex firms, Adani Ports, Axis Bank, Tata Steel, Tech Mahindra, NTPC, State Bank of India, UltraTech Cement and Bharat Electronics were among the biggest gainers. Axis Bank jumped over 4 per cent after the firm reported a 4 per cent growth in its December quarter net profit to Rs 7,010.65 crore against Rs 6,742.99 crore in the year-ago period.

In contrast, Mahindra & Mahindra, Kotak Mahindra Bank, Asian Paints, Eternal and ITC were among the laggards.

India and Europe on Tuesday announced the sealing of an ambitious free trade agreement -- billed as “mother of all deals” -- that came against the backdrop of a fractious global environment and trade disruptions largely caused by Washington’s policy on tariffs.

Today, India has concluded the biggest free trade agreement (FTA) in its history with the European Union, Prime Minister Narendra Modi said after holding summit talks with the 27-nation bloc’s top leaders, Ursula von der Leyen and Antonio Costa.

“It is important to understand that India has a trade surplus of USD 45 billion with the US but only USD 25 billion with the EU. Therefore, even while celebrating this India-EU deal, we should tirelessly pursue the US-India deal, which India badly needs. Also, this India-EU deal will become operational only in early 2027,” V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said.