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Tariff war relief lifts Sensex, but analysts not so enthused

Analysts said one must take every news regarding the trade war with a pinch of salt.

, ETMarkets.com|
Updated: Nov 07, 2019, 03.48 PM IST
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Following the development, the BSE Sensex staged a smart rebound from an intraday low of 40,421.
NEW DELHI: Hopes of de-escalation in US-China trade war pushed domestic indices back into black in Thursday’s trade after Sensex had slipped about 100 points around midday.

Analysts, however, said one must take every news regarding the trade war with a pinch of salt.

A Bloomberg report quoted a Chinese Ministry of Commerce spokesman as suggesting that China and the US have agreed to proportionally roll back tariffs on each other’s goods in phases.

Following the development, the BSE Sensex staged a smart rebound from an intraday low of 40,421. At 2 pm, the index was trading 104.45 points, or 0.26 per cent, higher at 40,574. Metals and mining stocks such as Jindal Steel, Hindustan Zinc, Hindalco and Vedanta and Tata Steel rallied up to 9 per cent.

The US and China have trust deficit and one must always take any new development with a pinch of salt, said Umesh Mehta of Samco Securities.

“Till the Phase 1 deal is signed, it’s 50:50,” said Sameer Kalra of Target Investing.

Amit Khurana, head of equities at Dolat Capital said it’s a wait and watch for the market.

The Bloomberg report quoting China’s spokesman Gao Feng suggested that the quantum of tariff relief in the Phase I deal would depend on the content of the agreement. The report suggested that the two sides had constructive talks in the past two weeks.

The report came a day after Reuters reported quoting a senior official that a meeting between US President Donald Trump and Chinese President Xi Jinping to sign a long-awaited interim trade deal could be delayed until December as discussions continue over terms and venue.

“If the deal does not go through, the market will be disappointed quite a bit,” Khurana said.
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