Sensex settles nearly 400 pts from day's low, Nifty above 25,500: Trade deal optimism among key factors behind market rise

Mumbai, July 8, 2025: Indian equity markets staged a strong comeback on Tuesday, July 8, reversing early losses to close on a positive note. The benchmark BSE Sensex recovered nearly 400 points from its intraday low, while the NSE Nifty 50 surged past the crucial 25,500 mark, buoyed by optimism surrounding an imminent global trade agreement, strong institutional buying, and resilience in key sectors like financials and FMCG.

Early Weakness Reversed on Global Cues

The Sensex opened lower in early trade, weighed down by weak Asian cues and mild profit-booking following a sharp rally last week. However, sentiment turned positive mid-session after global reports indicated significant progress in trade negotiations between major economies, including the United States and China. The index, which had fallen to a low of 84,755 in the morning session, rebounded sharply to close at 85,138.75, down just 64.95 points or 0.08%.

The Nifty 50, after dipping below 25,200, climbed steadily through the day and ended at 25,512.45, up 16.65 points or 0.07%.

Trade Optimism and FII Buying Among Key Drivers

Traders pointed to news of an upcoming framework for tariff reductions between the US and China as a pivotal turning point in the day’s mood. This added to hopes of a broader global economic recovery and supported risk-on sentiment in emerging markets.

"Global trade deal optimism was the key sentiment driver today. Though markets began on a cautious note, the strong comeback signals that bulls remain in control, especially with foreign institutional investors maintaining a steady buying streak," said Nirav Sheth, Head of Research at Anand Rathi Shares & Stock Brokers.

According to provisional data, Foreign Institutional Investors (FIIs) bought equities worth ₹1,232 crore on Tuesday, extending their net positive stance for the third consecutive session.

Sectoral Snapshot: FMCG and Financials Lead Recovery

Among the sectoral indices, the Nifty FMCG index rose 0.9%, supported by gains in heavyweights like ITC, Hindustan Unilever, and Nestle India. The Nifty Bank index also climbed 0.4%, as private sector lenders like HDFC Bank and ICICI Bank saw renewed buying interest.

"FMCG stocks benefitted from rural demand expectations and falling input costs, while banks continue to ride on robust credit growth and improving asset quality," noted Aditi Shah, Senior Analyst at Motilal Oswal Financial Services.

However, IT stocks underperformed amid uncertainty over global spending patterns and currency fluctuations. The Nifty IT index ended down 0.6%, led by TCS and Infosys.

Broader Markets Stay Firm

The broader markets mirrored the headline indices. The Nifty Midcap 100 rose 0.5%, while the Nifty Smallcap 100 gained 0.7%, indicating continued investor interest in domestic growth stories.

Advances outpaced declines on the NSE, with 1,362 stocks rising versus 857 falling, reflecting a healthy market breadth.

Global Markets Mixed; Oil, Dollar Watch On

Global equities showed mixed trends with European markets opening flat and US futures mildly in the green. Investors are also tracking crude oil prices, which remained stable around $83.50 per barrel, and the dollar index, which eased marginally to 104.85, aiding emerging market currencies like the rupee.

Brent crude's stability is seen as a positive for India’s import-heavy economy and inflation outlook.

Market Context and Technical View

Technical analysts observed that the Nifty’s ability to defend the 25,200 level and reclaim 25,500 signals strong undercurrents of buying.

"Today’s price action confirms the resilience in the current uptrend. Immediate resistance lies at 25,650–25,700, while support continues near 25,200. A sustained move above resistance can push the index toward 26,000," said Ruchit Jain, Lead Research Analyst at 5paisa.com.

Investor Outlook: Steady but Cautious

Despite the positive close, analysts urged caution due to upcoming domestic macroeconomic data including inflation and IIP numbers later this week, and the beginning of Q1FY26 earnings season.

“While the long-term market trajectory remains bullish, intermittent volatility is expected around earnings and global policy updates. Investors should adopt a stock-specific approach and focus on sectors with earnings visibility,” advised Kunal Shah, Fund Manager at Kotak Mutual Fund.

With the trade deal optimism acting as a tailwind and FIIs returning to Indian equities, near-term momentum is likely to favor the bulls. However, global uncertainties and domestic data remain key watch points for sustained upside.