Nifty tops 25,500, Sensex gains 300 points on trade deal optimism; volatility cools 3%

Mumbai, July 8, 2025 – Indian equity markets surged higher on Tuesday, with benchmark indices clocking notable gains on the back of renewed optimism around global trade negotiations and continued support from domestic macroeconomic indicators. The NSE Nifty50 closed above the key psychological level of 25,500 for the first time, while the BSE Sensex gained over 300 points, supported by broad-based buying across sectors.

The India VIX — a measure of market volatility — eased 3.1%, signaling improved investor confidence amid hopes of smoother global trade flows and supportive domestic earnings trends.

Trade Deal Sentiment Lifts Global and Indian Equities

Investor sentiment turned upbeat following media reports suggesting significant progress in the ongoing trade negotiations between major global economies, including the US and China. Sources indicate that a breakthrough deal on tariff reductions and technology transfer standards is likely to be finalized by the end of this month.

"Markets are pricing in a resolution to some of the geopolitical overhang that has clouded global economic growth. A favorable trade agreement between the US and China would be a game-changer for emerging markets like India,” said Deepak Jaswal, Head of Research at Axis Securities.

Benchmark Indices Hit Fresh Highs

The Nifty50 jumped 112.65 points or 0.44% to settle at 25,537.90, while the Sensex advanced 309.45 points or 0.39% to close at 84,212.47. Both indices marked fresh record highs in intraday trade, extending their winning streak to a fifth consecutive session.

The rally was broad-based, with gains led by banking, auto, and IT sectors. The Nifty Bank index gained 0.9%, driven by strong moves in ICICI Bank and HDFC Bank, while the Nifty Auto index climbed 1.2%, aided by Maruti Suzuki and Tata Motors.

Sectoral & Stock Highlights

• ICICI Bank rose 2.1% after a global brokerage raised its target price, citing stronger-than-expected loan growth and stable asset quality.

• Maruti Suzuki gained 3.4% on strong Q1 vehicle dispatch data and upbeat commentary from management on rural demand recovery.

• Infosys and TCS saw moderate gains ahead of their Q1 earnings, with expectations of stable margins and large deal wins.

• Metal stocks remained under pressure, with JSW Steel and Tata Steel falling 1-2% on weak Chinese demand indicators.

Cooling Volatility Indicates Confidence

The India VIX, which reflects traders’ perception of near-term market volatility, declined 3.1% to settle at 12.72 — its lowest level in nearly a month. The fall in volatility is being viewed as a sign of rising investor confidence and reduced apprehension around external risks.

"Low volatility, coupled with strong market breadth, suggests that the current rally is being supported by fundamentals and improving global cues,” said Anjali Sharma, Chief Market Strategist at Motilal Oswal Financial Services.

Macroeconomic Context Supports Bullish Momentum

India's macroeconomic environment continues to provide tailwinds to the equity markets. The latest GST collection numbers exceeded ₹1.83 lakh crore in June 2025, marking the third consecutive month of robust tax inflows, a clear indicator of economic resilience.

Meanwhile, the Reserve Bank of India (RBI) is widely expected to maintain a status quo on interest rates in its upcoming policy meeting, as inflation remains within its comfort zone and GDP growth projections remain strong.

FII Inflows Continue Amid Stable Earnings Outlook

Foreign Institutional Investors (FIIs) were net buyers in today’s session, with provisional data showing purchases of over ₹2,100 crore. Domestic Institutional Investors (DIIs) also supported the rally, reflecting confidence in the upcoming earnings season.

"Earnings season will be key to sustaining the current momentum. We expect strong performances from banks, auto, and capital goods sectors, which are likely to outperform on the back of volume growth and margin stability," said Ravi Nair, Portfolio Manager at HDFC Mutual Fund.

Technical View: Nifty Eyes Next Resistance at 25,700

With today’s breakout above 25,500, technical analysts believe the Nifty could move toward the 25,700-25,800 zone in the short term, provided it holds above the newly established support level of 25,350.

“The index has formed a bullish continuation pattern. Momentum indicators are in favor of further upside, although some consolidation can’t be ruled out after such a sharp move,” noted Kunal Shah, Senior Technical Analyst at LKP Securities.

Investor Outlook: Cautious Optimism Ahead

While the market mood is buoyant, analysts advise investors to remain selective and focus on fundamentally strong companies, especially as Q1 earnings start rolling in this week.

“Global factors are currently supportive, but any surprises on the inflation or geopolitical front can still lead to short-term volatility. Investors should continue SIPs, stay diversified, and avoid chasing momentum blindly,” advised Shruti Desai, Wealth Manager at Kotak Securities.