Indian Stock Markets Are Probably Near: Intermittent Bottoms 

The domestic equity market faced significant losses on Tuesday, marking its fifth consecutive day of decline. The drop was largely driven by concerns over escalating trade tensions after U.S. President Donald Trump imposed a 25% tariff on steel and aluminum imports. Photo: The Times of India.

The Nifty 50 fell below the 23,100 mark, closing at 23,071.80 (-1.32%), while the Sensex plunged 1,018.20 points (-1.32%) to settle at 76,293.60. Over the past five sessions, the Sensex and Nifty lost 2.91% and 2.81%, respectively.

The broader market underperformed, with the BSE Mid-Cap index down 2.88% and the Small-Cap index plunging 3.40%. Market sentiment remained weak, as indicated by the NSE India VIX, which rose 2.94% to 14.87.

Among sectoral indices, Nifty Bank (-1.16%) and Private Bank (-1.22%) outperformed the Nifty 50, while Nifty Realty (-3.07%), Media (-2.85%), and Auto (-2.33%) underperformed.

Key Indicators:

• 10-year Indian bond yield: Up 1.39% to 6.806.
• Rupee: Strengthened to 86.80 against the dollar. It is the highest one day recovery in a couple of years.
• Gold (MCX): Fell 0.41% to ₹85,461 per 10g.
• Brent Crude: Gained 1.25% to $76.82 per barrel.
• US Dollar Index: Dropped 0.06% to 108.27.
• US 10-year bond yield: Rose 0.62% to 4.523.

Global Markets:

While European markets traded higher amid earnings anticipation, Asian markets closed lower due to concerns over Trump's tariff measures. The U.S. markets saw a mixed reaction, with the S&P 500 (+0.7%) and NASDAQ (+1%) rising, led by Nvidia’s 3% surge, despite trade tensions. The Dow Jones gained 0.4%.

Looking ahead, markets are keenly watching Fed Chair Jerome Powell’s testimony on monetary policy and the upcoming U.S. inflation data, which could influence future interest rate decisions.

Market Outlook: Technicals, Tariff War, and Economic Prospects:

On the technical front, the Nifty appears poised for a rebound from its support levels at 22,700 – 23,000. Investors are advised to adopt a wait-and-watch approach before making fresh buying decisions. However, momentum stocks are expected to perform well in the near term.

Sector outlook: I countinue to remain positive on the following sectors: Automobile (Auto and Auto ancillary), Construction & Real Estate, Hotels and Hospitality, Textile or Apperal, Information Technology (IT), Hydro - projects, Renewable Energy and CNC Machines. 

The US Tariff War and India’s Stand:

With the US tariff war gaining momentum under Donald Trump, all eyes are on Indian Prime Minister Narendra Modi’s upcoming visit to the US, where trade tariffs will be a key discussion point. That said, the US cannot afford to overlook the benefits of cheaper Indian and Chinese imports for too long—especially if they aim to keep inflation under control. This so-called "tariff war" appears more like an election strategy rather than a long-term policy shift. Given India’s strong diplomatic ties with Trump, there is a possibility that India could receive a special trade status in the near future.

State of the Indian Economy:

India’s prolonged high interest rates have weakened its economic foundation, and it will take a series of repo rate cuts, open market operations (OMOs) by the RBI and other policies of the government to restore stability. 

However, with food prices expected to decline, the Consumer Price Index (CPI) is likely to stay below 5%, providing the RBI with more flexibility for rate cuts. Additionally, FII (Foreign Institutional Investors) outflows may gradually reduce as the government implements further stabilization measures to revive growth.

What are your thoughts? Drop your comments below!