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The Indian stock market experienced a downturn on Tuesday, with both the Sensex and Nifty indices closing lower. This negative performance can be attributed to a confluence of factors, primarily stemming from renewed tariff threats issued by U.S. President Donald Trump concerning India's continued importation of Russian oil. These threats, coupled with persistent outflows from foreign portfolio investors (FIIs), significantly dampened investor sentiment and eroded market confidence. The BSE Sensex concluded the trading session down by 308.47 points, equivalent to a 0.38% decrease, settling at 80,710.25. Similarly, the NSE Nifty experienced a decline of 66.20 points, representing a 0.27% drop, ultimately closing at 24,649.55. The broad-based selling pressure affected various sectors, although some individual stocks managed to buck the trend and post gains. The market's overall weakness underscores the sensitivity of the Indian economy and its financial markets to external factors, particularly those emanating from the United States, a major trading partner. Trump's unpredictable trade policies have consistently injected volatility into global markets, and the recent tariff threats directed at India serve as a stark reminder of this vulnerability. The reliance on foreign capital inflows further exacerbates the situation, as FII outflows can trigger significant market corrections. The article specifically highlights the negative impact of these factors on investor psychology, noting a general weakening of sentiment.
Analyzing the sectoral performance, the FMCG (Fast-Moving Consumer Goods) and IT (Information Technology) indices experienced declines of 0.7% and 0.5%, respectively. The Nifty Pharma index also witnessed a notable decrease of 0.8%. Within the Sensex pack, Adani Ports Eternal and BEL (Bharat Electronics Limited) shares were among the significant losers, registering declines ranging from 0.7% to 2.4%. In contrast to the broader market's downward trajectory, certain individual stocks exhibited resilience and even recorded substantial gains. Godfrey Phillips India emerged as a standout performer, surging by 10% following the announcement of a 56% year-on-year increase in its consolidated net profit for the June quarter, coupled with a 2:1 bonus share issue. This positive news propelled the stock higher, demonstrating the market's capacity to reward companies exhibiting strong financial performance. Conversely, Reliance Power shares faced considerable downward pressure, hitting their 5% lower circuit, extending recent losses amid reports concerning a potential investigation by the Enforcement Directorate (ED) into a Rs 17,000 crore loan fraud allegedly involving the group. This news weighed heavily on investor confidence, leading to a sharp decline in the stock's price. BSE Ltd also experienced a significant drop, falling by 4.3%, in response to reports suggesting that India's market regulator may impose restrictions on weekly expiry derivatives. This regulatory uncertainty prompted investor caution and contributed to the stock's decline. The broader market mirrored the weakness observed in the benchmark indices, with the Nifty Midcap 100 index down by 0.4% and the Nifty Smallcap 100 index lower by 0.2%. These declines indicate that the selling pressure extended beyond the large-cap stocks and impacted a wider range of companies.
Despite the prevailing negative sentiment, Aditya Infotech made a remarkable debut, jumping as much as 8% and delivering a 51% listing gain to IPO investors, exceeding pre-listing expectations. This strong performance highlights the potential for new listings to generate significant returns, even in a challenging market environment. The divergent performance of individual stocks underscores the importance of selective investing and thorough due diligence. Ajit Mishra, SVP, Research, Religare Broking, attributed the lingering market uncertainty to the ongoing tariff situation and the absence of major positive surprises from the earnings season. He further emphasized the significance of the upcoming MPC (Monetary Policy Committee) meeting, stating that "All eyes are now on the outcome of the upcoming MPC meeting. While the committee is expected to hold rates steady amid global uncertainties, the tone of their commentary will be crucial." Mishra advised investors to adopt a stock-specific approach and prioritize prudent position sizing during this corrective phase. Rupak De, Senior Technical Analyst at LKP Securities, provided a technical perspective, noting that the Nifty traded with a negative bias throughout the day, remaining below the 50EMA (Exponential Moving Average). He further indicated that "The current range is 24,400–24,850, and in the short term, the index is likely to remain within this band. Only a decisive move beyond this range might determine the next course of action for the market." De's technical analysis suggests that the market is likely to remain range-bound in the near term, with a breakout beyond the specified levels potentially triggering a more significant move.
Globally, equity markets exhibited a more positive trend, extending gains for a second consecutive session. This positive momentum was fueled by growing investor confidence that the U.S. Federal Reserve may intervene to support the economy with a rate cut as early as September. Wall Street experienced a rally on Monday, buoyed by encouraging corporate earnings and mounting expectations of monetary easing, following weaker-than-expected U.S. jobs data released on Friday. In Europe, the STOXX 600 index climbed by 0.4% in early trade on Tuesday, mirroring gains across Asian markets, where MSCI’s broadest index of Asia-Pacific shares outside Japan rose by 0.8%. The weaker nonfarm payrolls print has strengthened the case for a Fed pivot, with the outlook further complicated by President Donald Trump’s abrupt dismissal of the head of labor statistics responsible for the release. This global context highlights the interconnectedness of financial markets and the influence of macroeconomic factors on investor sentiment. The anticipation of monetary easing by the Federal Reserve has provided a boost to global equities, offsetting some of the negative impact from trade tensions and geopolitical uncertainties. The article also mentions the performance of other assets, with Bitcoin edging 0.6% lower to $114,235, while gold inched up 0.1% to $3,375 an ounce. Oil prices remained relatively stable, as markets weighed rising OPEC+ supply and concerns over weakening global demand against renewed geopolitical tensions. Brent crude futures slipped 36 cents, or 0.5%, to $68.40 a barrel, while U.S. West Texas Intermediate (WTI) fell 41 cents to $65.88.
The Indian rupee weakened for a second straight session, closing at 87.8000 against the U.S. dollar, down 0.2% from Monday’s 87.6550. Escalating trade tensions with the United States weighed on sentiment, although suspected central bank intervention helped limit losses after the currency touched an intraday low of 87.8850, narrowly avoiding a breach of its record low of 87.95 hit in February. The dollar index slipped 0.3% to 98.967. The weakening of the rupee reflects the impact of trade-related concerns on the Indian currency. The central bank's intervention suggests an attempt to stabilize the currency and prevent further depreciation. In conclusion, the Indian stock market experienced a challenging day, primarily due to external factors such as tariff threats and FII outflows. While certain individual stocks demonstrated resilience, the overall sentiment remained cautious. The global context, characterized by anticipation of monetary easing and ongoing trade tensions, further influenced market dynamics. Investors are advised to adopt a stock-specific approach and carefully monitor developments in both the domestic and global economies.
Source: Sensex sheds 308 points, Nifty cracks below 24,700 on FII exodus, Trump's latest tariff threat