Stock Market Update: Trade Tensions Weigh on Sensex; Nifty Exhibits Resilience
The Indian stock market witnessed a mixed performance on Friday, with the BSE Sensex trading at 83,059.67, down by 179.8 points or 0.22%, and the Nifty 50 standing at 25,350.15, up 55 points or 0.21%.
Brent Crude oil remained near $88 per barrel, supported by OPEC+ supply cuts and geopolitical tensions. However, this rise in oil prices, coupled with cautious global risk sentiment, influenced the Indian rupee to trade slightly weaker against the US dollar.
Nifty Metal was the top laggard, down 0.8%, as global commodity prices slipped and demand forecasts weakened. Tata Steel and JSW Steel faced selling pressure as metal prices eased globally. Asian Paints also felt the pressure due to weighing input costs.
On the other hand, Nifty Realty and Oil & Gas showed strength, supported by steady demand and firm global crude oil prices. Bharat Electronics moved higher as defence-related counters benefited from policy optimism and solid order books.
The Indian equity markets have experienced varied impacts from U.S. tariff decisions in recent times. Moody's Outlook suggests that India might benefit from lower tariffs compared to other Asia-Pacific countries, which could attract more investment and strengthen its position as a manufacturing hub. However, the looming July 9 tariff deadline for India-US trade has created uncertainty, with potential tariffs of up to 26% potentially negatively impacting Indian exports and the stock market.
Ongoing negotiations between India and the US are crucial. A favorable deal could reduce tariffs, giving Indian companies a competitive edge. In contrast, a failure to reach an agreement could lead to increased tariffs, affecting margins and demand. India's recent FTA with the UK and ongoing talks with the EU provide alternative export opportunities, which could help mitigate the impact of U.S. tariffs on the stock market.
The uncertainty surrounding U.S. tariff decisions can lead to market volatility. Investors closely watch trade developments, as they can significantly influence sector-specific stocks and overall market sentiment.
Cautious optimism prevails in Indian equity markets, with investors focusing on large-cap defensives and stocks with strong fundamentals while trimming positions in cyclicals and high-beta counters. Nifty IT gained slightly, reflecting a shift towards defensive plays in a volatile market. Tech Mahindra traded in the red, likely due to global IT demand uncertainty.
Hindustan Unilever added strength to the index, backed by strong demand in rural and semi-urban markets. Nifty FMCG traded higher, supported by consistent consumer demand and stable margins. Bajaj Finance outperformed, gaining on strong credit demand and stable financial metrics.
However, Nifty Bank and Nifty Consumer Durables showed minor weakness without specific points of reference. Maruti Suzuki and Mahindra & Mahindra continued to trade weak, with investors reacting to slower volume growth and rising cost pressures.
Nifty Pharma remained firm, driven by expectations of new drug approvals and rising export orders. Trent faced sharp selling pressure amid concerns about high valuations and muted consumer sentiment.
The upcoming Q1 earnings season is likely to shape investor decisions, with several major companies across various sectors set to release their financial results over the next two weeks. Volatility may increase in the coming sessions as critical triggers unfold, both globally and domestically.
Investors might find opportunities in the oil and gas sector, given the steady demand and firm global crude oil prices, which could potentially influence the stock-market performance. Meanwhile, cautious global risk sentiment, coupled with the rise in oil prices, could impact the financials of companies in other sectors, such as Nifty Metal, as they face selling pressure due to slippage in global commodity prices.
