Markets Cheer Earnings Optimism and Trade Truce Hopes, Nifty Nears 25,600

Indian equities moved higher on Thursday, with both benchmark indices rising close to 1% as foreign investor selling slowed and sentiment improved ahead of second-quarter results. Hopes of a possible trade truce between Washington and New Delhi also lifted market mood.

The Nifty jumped 261 points, or 1%, to end the day at 25,585, while the Sensex climbed 673 points, or 0.8%, to close at 83,467.7. Market experts believe the Nifty could test the 26,000 mark in the coming weeks, though much will depend on how US-India trade talks unfold after Diwali. (NSE India)

What is the Ongoing Trade Dispute?

The US and India have been embroiled in a trade dispute after President Trump levied a 25% tariff on Indian exports in July this year. A week later, Trump announced an additional 25% tariff “for buying Russian oil”, a move which some economists estimate could affect India’s GDP by up to 0.4%. (DD News)

However, the US’ ongoing tiff with China could work in New Delhi’s favour, as Washington rethinks its strategy with allies. This comes on the back of US Secretary Scott Bessent’s statement listing India amongst its allies in a “China versus the world” fight over rare earth minerals.

Rare earth minerals are critical for auto, electronics and defence industries. Controlling nearly 80% of the world’s rare earth minerals supply, Xi Jinping’s government has been tightening exports, causing a major supply crunch earlier this year. China’s official figures state that critical minerals exports were down more than 30% compared to September 2024. (BBC)

This shortage has prompted global powers to diversify their supply chains. Australia, which is rich in rare earth deposits, has already scaled up production. India, too, has joined the race, with the government launching a National Critical Mineral Mission to achieve self-reliance and reduce dependence on Chinese imports.

India’s Russian Oil Affair

Another area of friction between New Delhi and Washington is India’s continued purchase of Russian crude oil. The Trump administration has criticised the move, arguing that it weakens sanctions imposed on Moscow.

Trump has publicly claimed that he has received Prime Minister Narendra Modi’s assurance that India will gradually reduce its oil imports from Russia. However, the Ministry of External Affairs, in an earlier statement, clarified that India’s energy policy “is guided by national interest and the protection of its consumers from volatility.” (The Times of India)

India has maintained that affordable energy supplies are essential to sustain its economic growth, especially as global oil prices have remained elevated. Russian crude, sold at a discount, continues to play a key role in keeping India’s import bill manageable and inflation under control.

According to government data, Russia remains India’s largest crude supplier, accounting for nearly 35% of total imports in September. The government has also indicated that it will continue sourcing oil from a diverse range of countries, including the US, Saudi Arabia, and the UAE, while keeping energy security as a top priority. (The Moscow Times)

What Lies Ahead?

Analysts believe that progress on the trade front could provide a fresh boost to Indian equities, particularly if tariff concerns are resolved ahead of the festive season. A truce between the two nations would not only ease investor concerns but could also strengthen India’s position as a key manufacturing and technology partner in the Indo-Pacific region.

However, if talks stall or new trade restrictions are imposed, markets could see renewed volatility. The next few weeks will likely reveal whether the diplomatic efforts translate into concrete policy changes or remain at the level of reassuring statements.

For now, investors are watching both Washington and New Delhi closely. Will a breakthrough in trade talks come in time to fuel a year-end rally on Dalal Street?

Sources

NSE India
DD News
BBC
The Times of India
The Moscow Times