The benchmark equity indices extended declined for third straight day on Thursday as investor sentiment turned weak following fresh US tariff measures against Indian goods and persistent foreign fund outflows.
At 1:40 pm, the Sensex was down 719.38 points or 0.89 percent at 79,824.61, and the Nifty was down 220.80 points or 0.9 percent at 24,353.40. About 915 shares advanced, 2,588 shares declined, and 99 shares were unchanged.
Adani Ports, Tata Motors, Kotak Mahindra Bank, Tata Steel, NTPC and Eternal were among the major laggards.
1) Trump doubles tariffs on India: Market sentiment was hit after US President Donald Trump announced a hike in tariffs on Indian goods to 50 percent, citing India’s continued imports of Russian oil. The move, doubling the earlier duty, drew sharp criticism from New Delhi, which termed it “unfair, unjustified and unreasonable.” Sectors such as textiles, marine, and leather, which are export-oriented, are expected to be particularly impacted.
If implemented, a 50 percent tariff could significantly impact trade flows, weigh on economic growth and trigger a near-term knee-jerk reaction in domestic markets, Mahesh Patil, chief investment officer at Aditya Birla Sun Life AM told Reuters.
"As such, there is no major fresh negative surprise. Moreover, a 20-day window remains for negotiations, with a U.S. trade delegation expected to visit India on August 24, which is trimming the losses in markets," added Santosh Meena, head of research at Swastika Investmart. "The market's near-term texture looks fragile, weighed down by a double whammy of U.S. President Donald Trump's tariff aggression and underwhelming June-quarter earnings," Swastika's Meena said.
2) FII Selling: Foreign Institutional Investors (FIIs) sold equities worth Rs 4,999.10 crore on Wednesday. Persistent FII outflows lead to increased volatility and exert downward pressure on domestic markets.
3) Crude rises: Global crude oil prices also rose, with Brent crude gaining 1 percent to $67.56 per barrel. Rising oil prices widen India’s import bill and raise inflationary concerns, which in turn affect market performance.
4) India VIX Inches Up: The India VIX, which measures market volatility and is often termed as the 'fear gauge', rose nearly 2 percent to 12.16. A rise in VIX reflects heightened investor nervousness and suggests increased caution among market participants, especially amid global uncertainty.
Technical View
According to Anand James, Chief Market Strategist at Geojit Financial Services, while the recent lows have not been significantly lower, the continued formation of lower highs signals bearish dominance.
"Downside momentum could persist with targets around 24,080–23,560. A move above 24,590 may open up upside potential, but a decisive push above 24,670 is needed for confirmation of any recovery," James said.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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