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Nifty extends gains as US softens its stand on Tariffs lifting sentiments

ICICIdirect Research 12 Sep 2025 DISCLAIMER

Week that was: Equity benchmark extended gains over second consecutive week and settled at 25100, up 1.5%. Beaten down sectors like IT, Defence, PSU Banks staged a strong rebound while Consumer Discretionary took a breather
Key Highlight:
The follow through strength in Indian markets is on the back of US warming up to India for a trade deal after putting stiff tariff of 50 per cent. Softer US job data and prospects of Fed rate cuts are leading to a risk on rally in the markets.
What to expect:
Further, positive outcome from US Fed meets as well as US Tariff negations would further fuel the momentum to drive Nifty towards 25800 in coming months. Meanwhile, strong base of 24400 would continue to act as key support threshold
Key drivers of next leg of rally: The key index heavy weights like Bank Nifty and IT (carrying 45% weightage in Nifty) are getting ready for next leg of up move.
Sharp fall in U.S. bond yields may trigger a change in trend of FPI flows
U.S. 10-year bond yield has fallen by almost 20bps in last 2 weeks, 60bps in last 4 months and 80bps since January this year to ~4.0%. Foreign investors who have sold Indian equities worth more than Rs 2.3 lakh crore since October 2024 may return to Indian markets post this sharp fall in yields as U.S. debt market becomes less attractive post the recent rally.
(Nifty 50 index is down 10% from the top in USD terms aided by fall in INR while most US indices all making fresh highs).

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