Sensex, Nifty Rebound After Early Slide as US Ambassador Signals Progress on India–U.S. Trade Talks

Markets Recover After Early Dip

Indian equity benchmarks staged a strong intraday comeback on Monday, reversing early losses as investor nerves around India–U.S. trade relations eased following reassuring comments from Washington’s new ambassador to New Delhi.

At around 1:33 pm IST, the Nifty 50 rose 0.2% to 25,734.7, while the Sensex added 0.14% to trade at 83,693.35. Earlier in the session, both indices had slipped as much as 0.8%, weighed down by global uncertainty and caution ahead of key economic data.

U.S. Ambassador’s Comments Boost Sentiment

Sentiment turned positive after Sergio Gor, the newly appointed U.S. ambassador to India, said that India and the United States would continue active engagement on trade issues. He also confirmed that the next round of discussions between the two countries is scheduled for January 13, easing fears of a prolonged trade impasse.

Short Covering Drives Market Rebound

Market participants said the ambassador’s remarks triggered short covering, particularly in heavyweight stocks. “The positive statement by the U.S. ambassador on the continuation of talks on the India–U.S. trade deal and the reiteration of India’s importance as a trade partner led to short covering during the day,” said Sunny Agrawal, Head of Fundamental Equity Research at SBICAPS Securities.

Broader Markets Underperform

Despite the recovery in benchmark indices, market breadth remained weak. Nine of the 16 major sectoral indices were trading lower. Broader markets continued to lag, with the Nifty Smallcap 100 declining 1% and the Nifty Midcap 100 falling 0.6%, reflecting persistent caution among investors.

Financial Stocks Lead the Comeback

High-weight financial stocks were instrumental in lifting the indices. The Nifty Financial Services index rose 0.5%, rebounding from losses of around 0.4% earlier in the session as investors selectively accumulated large-cap financial names.

Stock-Specific Action: Lemon Tree, Reliance in Focus

Among individual stocks, Lemon Tree Hotels jumped nearly 3% after announcing a ₹9.6 billion investment by private equity firm Warburg Pincus in its unit, strengthening confidence in the company’s restructuring strategy.

Index heavyweight Reliance Industries also staged a partial recovery. The stock, which had dropped 1.7% to a 10-week low earlier in the day, pared most of its losses and was trading about 0.3% lower. Reliance had come under pressure last week after flagging concerns over the absence of Russian crude oil deliveries in January due to tariff uncertainties.

Inflation Data in Spotlight

Investors are now awaiting India’s inflation data, scheduled for release later in the day, for further economic direction. A Reuters poll suggests consumer inflation likely rose for the second consecutive month in December, driven by higher food prices and the fading impact of favourable base effects.

(With Inputs From Reuters)

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