Stock Market: Bulls Eye 2 Cues to Chase Equities in Trump Era

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Stock Markets Rebound After US Announces Tariff Pause

By S Jha

New Delhi, February 4: Global equity markets took breather after the US paused tariffs on Mexico and Canada. The US bourses gained overnight while Indian indices were trading with decent gains in early trades.

Nifty was trading with gains of more than 180 points. Bank Nifty was bullish with gains of over 700 points. The street is expecting the Reserve Bank of India (RBI) to give breather to the equity markets in monetary policy meeting this week with dovish rate commentary.

But market participants continue to be wary of the global upheavals set off by the Donald Trump presidency. Volatility in the stock market is troubling investors.

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Yet, the market participants are hoping that the foreign portfolio investors may soon dry their selloff fury in the Indian equity markets. The FPIs pulled out over $10 billion (₹87,000 crore) from Indian stocks in January, 2025.

“Many people are worried about their (FPIs) selling, but I am more interested in figuring out when they will return,” wrote a seasoned market participant in an investors’ group.

He reasoned that “capital always goes where it can get better returns” to contextualize FPIs pulling out from the Indian stock markets. “Right now, returns in the U.S. (both in stocks and bonds) are more attractive in dollar terms, so money is flowing out of India,” added the investor.

He argued that the FPIs will start buying the Indian equities once the dollar index cools down along with the bond yield. “I believe they will come back if the US Dollar Index (DXY) falls below 105, ideally closer to 100, and the US 10-year bond yields drop below 3.5–4 per cent,” added the veteran investor.

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Besides, the investors are also hoping that the Nasdaq valuations soon revert to the mean. “For the first time in six months, the Nasdaq has given a negative return over the past month. This could be an early sign of a shift,” he added.

Consumer goods and PSU indices were leading the gains in the stock markets on Tuesday. Consumption related stocks were seen to be in demand in the street.

Disclaimer: This article makes no recommendation for buy or sell of shares of any company.

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