India’s equity benchmarks, the Sensex and Nifty 50, continued to extend their gains on Tuesday, riding the momentum from a strong performance in global markets. The Nifty 50 remained above the 22,690 mark, while the Sensex surged by 586.14 points (0.79%), reflecting a recovery in major international indices. This positive performance is mainly driven by a rebound in global stock markets, notably the Asian and US markets, which are closely influencing investor sentiment.

Global Market Strength Drives Indian Markets

The rally in Indian stock markets follows the positive performance of global indices. Asian markets, especially, have shown strong gains. Japan's Nikkei 225 gained 1.34%, while the Topix index increased by 1.26%. South Korea’s Kospi rose by 0.76%, and the Kosdaq added 0.38%. These increases were seen as a positive sign for investors across the region.

Wall Street also posted strong results, with the Dow Jones Industrial Average climbing 353.44 points (0.85%) to 41,841.63. Both the S&P 500 and the Nasdaq Composite finished higher, which further boosted market sentiment globally. These positive movements in the international markets were reflected in the Indian market's upbeat performance.

US Retail Sales Recovery Adds Optimism

One of the key drivers of this market rally is the recovery in US retail sales, which increased by 0.2% in February. Although this growth was slightly below economists' expectations of 0.6%, it marked a rebound from the 1.2% decline seen in January. The improvement in retail sales signals some resilience in consumer spending, which is a key component of the US economy. This recovery is fueling optimism that consumer confidence is gradually returning, even amid global uncertainties.

Gold Prices Remain Elevated Amid Market Volatility

Gold prices, often seen as a safe-haven asset in times of economic uncertainty, continue to hover near all-time highs. Spot gold was steady at $3,002.28 per ounce, just slightly below Friday’s record high of $3,004.86. US gold futures also saw a 0.2% increase, reaching $3,012.00, reflecting the continued demand for gold as a protective investment in uncertain times.

Gold’s consistent price strength signals that investors are increasingly prioritizing safety in an environment of rising trade tensions and geopolitical risks. As markets react to global economic developments, gold is maintaining its status as a preferred asset for wealth preservation.

Nifty Set to Open Strong with Gift Nifty

The Indian stock market looks set for a gap-up opening, as indicated by the Gift Nifty. Currently, the Gift Nifty is trading around 22,730, a 146-point premium over the Nifty futures’ previous close. This premium suggests that the Nifty could open higher, further driving the upward momentum in Indian equities. The overall sentiment in the market is positive, as investors remain hopeful following the global rally.

Political and Geopolitical Developments Impacting Markets

Despite the optimism in global markets, political and geopolitical tensions continue to influence investor sentiment.

US-Russia Talks on Ukraine: The Kremlin confirmed that Russian President Vladimir Putin is scheduled to speak with former US President Donald Trump regarding efforts to end the ongoing war in Ukraine. Any developments on this front could have significant implications for global markets, particularly in terms of geopolitical stability.

Israel-Hamas Conflict Escalation: Tensions in the Middle East have escalated as Israel carried out extensive strikes on Hamas targets in Gaza, resulting in at least 30 casualties. This has been one of the most intense attacks since the ceasefire began in January. As the conflict persists, it adds to the global uncertainty and could impact market behavior, especially in the energy sector.

Market Sentiment and Investor Outlook

According to Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd., despite minor setbacks, Indian markets managed to gain momentum and trade in positive territory due to the optimism across global markets. Tapse also noted that while global markets are showing recovery, investors remain cautious, particularly due to the uncertainty surrounding the impact of US tariff policies on major economies, including India.

With the US Federal Reserve’s policy decision scheduled for Wednesday, investors are keeping a close eye on any clues about the future economic outlook. The outcome of this meeting could significantly impact market sentiment in the coming weeks, particularly in light of the ongoing trade tensions and tariff concerns.

The Indian stock market’s continued rally on March 18 reflects a broader global trend of recovery, driven by strong performances in Asia and Wall Street. Factors such as the rebound in US retail sales and the consistent strength in gold prices are contributing to the positive sentiment. However, geopolitical issues and the impending US Federal Reserve decision could create volatility. As investors navigate through this uncertainty, market sentiment remains cautiously optimistic, with global developments continuing to play a key role in shaping future market trends.