Sensex Jumps Over 1,300 Points After Trump Pauses Tariffs Till July 9

The Indian stock market witnessed a significant rally on April 11, 2025, with the BSE Sensex surging over 1,300 points following US President Donald Trump’s announcement of a 90-day pause on reciprocal tariffs for multiple countries, including India. This comprehensive report examines the market movement, its causes, sectoral impacts, and future implications.

Market Performance Highlights

The BSE Sensex closed with robust gains of 1,310 points (1.76%), settling at 75,148, while the NSE Nifty 50 index surged by 430 points (1.92%) to close at 22,828 DSIJ. This rally marked the Nifty 50’s highest intraday gain in the last three months, representing a significant rebound from earlier losses experienced during the week.

The market opened with strong momentum, with the Sensex jumping 1,061.26 points to open at 74,941.53 and the Nifty climbing 354.90 points to start the day at 22,754.05 NDTV. The positive sentiment continued throughout the trading session, with all sectors recording gains.

Trump’s Tariff Pause: The Catalyst

Background on Tariffs

On April 2, 2025, President Trump announced sweeping tariff measures against approximately 60 countries exporting goods to the United States. This included:

1. A baseline 10% tariff on all countries
2. Additional country-specific “reciprocal tariffs” based on bilateral trade deficits
3. For India specifically, an additional 26% tariff was imposed LiveMint

The 90-Day Pause

On April 9, 2025, President Trump issued an executive order announcing a 90-day pause on these country-specific reciprocal tariffs until July 9, 2025. Key aspects of this pause include:

1. Suspension of the additional 26% tariff on Indian exports
2. Continuation of the baseline 10% tariff on all countries
3. A significant exception for China, which saw its tariffs increased to 125% (later raised to 145%) Reuters

The pause is intended to provide countries time to negotiate bilateral trade agreements with the United States. Without such agreements by July 9, the tariffs would be reinstated.

Sectoral Performance

Metal Sector: The Standout Performer

The metal sector emerged as the top performer during the April 11 rally:

• The Nifty Metal index surged by over 4.09% Business Standard
• Top gainers in this sector included:
  • Hindalco Industries: Up 6.48%
  • Tata Steel: Up 4.89%
  • JSW Steel: Up 4.72%
  • Lloyds Metals & Energy: Up 4.1%

Pharmaceutical Sector

The pharmaceutical sector also posted substantial gains:

• The Nifty Pharma index rose by approximately 3.55% Business Standard
• Notable performers included:
  • Granules: Up nearly 5%
  • Cipla: Up approximately 4%
  • Laurus Labs: Significant gains

Other Performing Sectors

Other sectors that contributed to the market rally included:

1. Energy
2. Consumer Durables
3. Oil & Gas
4. Banking
5. Auto

The overall market sentiment was broadly positive, with small and midcap indices also posting gains of around 2% Moneycontrol.

Impacted Export Sectors and Trade Relations

Key Indian Export Sectors

The tariff pause has significant implications for several Indian export sectors:

1. Electronics Products: With nearly $14 billion worth of exports affected by US tariffs Reuters
2. Gems and Jewelry: Over $9 billion in exports impacted by tariffs
3. Shrimp Exports: The pause provides particular relief to Indian shrimp exporters who faced a tariff disadvantage compared to competitors
4. Pharmaceutical Goods: A key sector for India with significant US market presence

India-US Trade Relations and Negotiations

The 90-day pause has accelerated trade negotiations between India and the US:

1. India and the US agreed in February 2025 to work on a bilateral trade agreement to be concluded by late 2025
2. The countries aim to increase two-way trade to $500 billion by 2030, up from the current $191 billion
3. India is now focusing on expediting these negotiations to finalize a deal before the July 9 deadline Business Standard

US-India Trade Significance

• The US accounts for approximately 18% of India’s total goods exports
• It represents 6.22% of India’s imports and 10.73% of bilateral trade
• This trade relationship is crucial for India’s economic growth prospects LiveMint

Potential Opportunities for India

China Tariff Differential

With China facing significantly higher tariffs (145%) compared to India’s current 10% baseline:

1. Indian manufacturers in sectors like textiles, leather, engineering, and chemicals could gain market share in the US OutlookBusiness
2. The electronics sector, particularly manufacturing, could see accelerated growth as companies seek alternatives to Chinese production Economic Times
3. Solar engineering, procurement, and construction (EPC) firms with US market exposure stand to benefit Moneycontrol

Potential Challenges

Despite the positive market reaction, several challenges remain:

1. The baseline 10% tariff continues to affect all Indian exports
2. The temporary nature of the pause creates uncertainty for long-term business planning
3. If trade negotiations fail to yield results before July 9, the 26% additional tariff could be reinstated
4. Potential diversion of Chinese exports to India could impact domestic manufacturers CNBC

Bilateral Trade Agreement Negotiations

Current Status

India is actively pursuing negotiations for a Bilateral Trade Agreement (BTA) with the US:

1. The countries have jointly agreed to a timeline for concluding the deal
2. India is working to address key areas of concern for the US, including digital trade, dairy sector access, and intellectual property rights Equentis
3. Negotiations aim for at least a partial deal before the July 9 deadline

Key Negotiation Points

The trade negotiations are focusing on several critical areas:

1. Reduction of tariffs on US imports like almonds, cranberries, and bourbon whiskey
2. Addressing non-tariff barriers that affect US exports to India
3. Increasing scrutiny on low-cost imports to prevent dumping, especially from China
4. Enhancing market access for key Indian export sectors

Market Outlook and Future Implications

Short-term Outlook

The market’s strong positive reaction indicates improved sentiment, but experts caution about potential volatility:

1. The rally wiped out the weekly losses but remains subject to developments in trade negotiations
2. Global market reactions to Trump’s tariff policies will continue to influence Indian markets
3. Upcoming corporate earnings may provide further direction for market movements

Long-term Implications

The longer-term outlook depends on several factors:

1. The outcome of US-India trade negotiations before the July 9 deadline
2. The evolving US-China trade war and its global economic impact
3. India’s ability to capitalize on opportunities created by higher Chinese tariffs
4. Potential retaliatory measures from China affecting global supply chains and trade flows

Conclusion

The Sensex jump of over 1,300 points on April 11, 2025, represents a significant market reaction to the temporary easing of trade tensions between India and the US. While the 90-day pause on reciprocal tariffs provides immediate relief and has sparked a rally across sectors, the long-term outlook depends heavily on the success of ongoing trade negotiations.

For Indian businesses and investors, this pause creates both opportunities and challenges. Export-oriented sectors, particularly those competing with Chinese manufacturers in the US market, may find new growth avenues. However, the temporary nature of the relief underscores the importance of finalizing a robust bilateral trade agreement before the July 9 deadline to secure longer-term benefits for the Indian economy.

The coming weeks will be critical as negotiators from both countries work to address complex trade issues and potentially transform this temporary reprieve into a more permanent and mutually beneficial trade relationship.