Stock markets are taking US President Donald Trump’s tariff war in their stride.

Riding on the back of positive global cues, the Sensex and Nifty rose nearly 2 per cent, in one of the strongest rallies since March 2017. The Sensex gained 610 points to close at 33,917. The Nifty rose 195 points to close at 10,421.

Global markets from Tokyo to Europe and the US brushed aside fears of a global trade war as they felt that Trump was using the tariff hike as a mere negotiating tool and that other countries lacked specific retaliatory measures.

Last week, Trump announced tariffs of 25 per cent on steel imports and 10 per cent on aluminium imports.

“Trade war concerns took a back seat to economic optimism in the US,” said a fund manager at a Mumbai-based mutual fund. “The ‘Goldilocks mood’ from Friday’s US jobs report (high growth, low inflation) has spread around the globe, sending stock markets higher. Yet, there is a need to be cautious on the domestic front.”

While the US was witnessing a sustained drop in its unemployment numbers, the same cannot be said for India, which is witnessing its slowest corporate earnings growth in over a decade. Also, top global experts have cautioned that world growth numbers are built on the back of an unprecedented stimulus by central banks and was illusionary.

The Sensex and Nifty too are trading near their peak price-to-earnings multiple last seen during the 2000 dotcom bubble and the 2008 financial crisis.

The Nifty PSU Banking index, the worst performer since February 1, fell by over 3 per cent on Monday before recovering to close just 0.5 per cent lower than its Friday’s close. The broader Nifty Banking index rose 367 points, or 1.51 per cent. Since February, India’s stock markets have fallen by around 10 per cent from their peak levels.

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