On Tuesday, the Indian equity markets reversed their early gains, with the benchmark indices slipping by nearly half a percent, influenced by weak global cues and foreign fund outflows.
At 1:38 pm, Sensex was down 443.24 points at 81,883.81, while Nifty slipped 128.65 points to 25,098.60. The indices had initially touched intraday highs before reversing course.
Top Movers: Bajaj Finance, Tata Steel Lag
Among sectoral movers, Bajaj Finance, Tata Steel, Axis Bank, BEL, TCS, and Trent were the top laggards. On the other hand, Tata Motors, Tech Mahindra, HCL Tech, HUL, and Powergrid emerged as the gainers.
Sugandha Sachdeva, Founder of SS WealthStreet, explained, “After surging in the last two weeks, benchmark index Nifty has started this week on a subdued note and has declined by around 0.59% for the current trading session. This is largely on the back of renewed trade tensions between the US and China.”
US-China Trade Tensions Weigh on Markets
Sachdeva added, “China has decided to impose curbs on its exports of rare earth materials, where it controls almost 80% of global supply. These are critical for US AI technology. In retaliation, US President Trump has threatened to sharply hike tariffs on Chinese imports, potentially up to 100% effective November 1. This has raised concerns of higher inflation and could impact the interest rate trajectory of the US Fed.”
Markets are currently pricing in a 97% chance of a 25-basis-point rate cut at the Fed’s October end meeting, but escalating trade tensions could alter the Fed’s stance.
Key Levels To Watch Today
Sachdeva also noted, “There are expectations that the US and India are likely to strike the first part of a trade deal in the next few months, which could underpin the index at lower levels. Key technical levels suggest strong resistance at 25,330 and support at 24,800. As long as 24,800 holds, we could see renewed buying interest.”
Rising Volatility Adds to Market Nervousness
India VIX, a measure of market volatility, rose over 3% to 11, reflecting growing nervousness among traders. A higher VIX typically signals increased uncertainty and potential for sharper price swings in equities.
Weak Global Cues Keep Pressure on Stocks
Asian markets remained under pressure, with South Korea’s Kospi and Shanghai’s Composite Index down nearly 1%, while Japan’s Nikkei 225 and Hong Kong’s Hang Seng fell up to 3%. Wall Street futures were also lower by up to 0.5%, suggesting a weak start for US markets later in the day.
Rupee Depreciates, Crude Rises
The Indian rupee weakened by 9 paise to 88.77 per US dollar, pressured by a stronger greenback and foreign fund outflows. Meanwhile, Brent crude rose 0.33% to USD 63.53 a barrel, which could weigh on equities by increasing inflationary pressures and widening India’s trade deficit.
FII Outflows Continue
Foreign Institutional Investors (FIIs) have been net sellers for the past three months. Yesterday, they offloaded shares worth Rs 240 crore, further weighing on market sentiment.
Despite the negative cues, analysts maintain a cautiously positive outlook, emphasizing that as long as Nifty’s 24,800 support holds, buying opportunities may emerge at lower levels.