Markets rise in early trade amid foreign fund inflows but face volatility

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Equity markets began on a positive note on Wednesday, as the Sensex and Nifty both gained on the back of fresh foreign fund inflows and a strong rally in US markets. However, concerns surrounding trade tensions and tariff threats from US President-elect Donald Trump led to increased volatility during the morning session.

The BSE benchmark Sensex surged by 166.1 points, reaching 80,170.16 in the early trade, while the NSE Nifty rose by 74.35 points to touch 24,268.85. However, both indices experienced fluctuations later, with the Sensex trading 60.26 points higher at 80,055.58 and the Nifty advancing by 16.55 points to 24,211.10 by midday.

Key stocks that contributed to the early gains included Mahindra & Mahindra, Kotak Mahindra Bank, Adani Ports, HCL Technologies, Tech Mahindra, and NTPC, which were among the top gainers on the Sensex. On the other hand, IndusInd Bank, Bharti Airtel, Tata Steel, and UltraTech Cement saw declines.

Foreign Institutional Investors (FIIs) were net buyers, purchasing equities worth Rs 1,157.70 crore on Tuesday, according to data from the exchange.

Despite the early gains, the market faced volatility due to renewed tariff threats by US President-elect Donald Trump, which sparked concerns about potential trade tensions. Trump's administration had already announced plans for 25 per cent tariffs on imports from Mexico and Canada, as well as an additional 10 per cent tariff on Chinese goods. This announcement had an immediate impact on investor sentiment, with fears rising over the potential consequences on global trade relations.

Prashanth Tapse, Senior Vice President (Research) at Mehta Equities Ltd, noted that the tariff threats had dampened market sentiment, adding to the ongoing uncertainty. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, indicated that the market may consolidate around current levels, as there were no immediate catalysts for a breakout or a significant downturn.

Asian markets displayed a mixed performance, with Shanghai and Hong Kong trading in the positive, while Tokyo and Seoul saw declines. Meanwhile, US markets ended on a positive note on Tuesday, adding a sense of optimism to global markets.

In commodity markets, Brent crude, the global oil benchmark, rose by 0.05 per cent to USD 72.85 per barrel.

Despite these positive early movements, the BSE benchmark index had experienced a decline of 105.79 points or 0.13 per cent, settling at 80,004.06 on Tuesday. The Nifty also dipped 27.40 points or 0.11 per cent, closing at 24,194.50.

As per PTI, market experts are predicting continued volatility, with investors keeping a close watch on the evolving trade dynamics between the US and its global partners.

(With inputs from PTI)