Nifty Declines: As worse as it could get. For D-street investors, the statement is perhaps the best depiction of the current movements in the domestic stock market. NSE Nifty has now breached the key 22k support level, where several market players had placed their hopes. Benchmark indices are now down by around 15% from their 52-week-high. Last week alone, markets declined by 3%, with almost all sectors trading in the negative territory.
While factors like Foreign capital outflow, sky-high valuations and volatile growth outlook weighed heavily on investor's sentiment, the recent bloodbath across Wall Street has further added to the pressure. Trump's tariff cycle starts off today with Canada, Mexico and China on the initial radar. The US has imposed a straight 25% tariff rate on the imports of these nations (higher rate levels for China).
The upcoming weeks will witness similar tariff impositions, giving rise to an even more uncertain outlook in the global space. "Uncertainty unleashed by Trump is aggravating in global trade. The 25% tariff on Canada and Mexico and the 20% tariff on China (with the additional 10% imposed now) kicking in the threats are turning into action. The retaliation to these Trump tariffs is yet to be known. Certainly, there will be responses," said V K Vijayakumar, chief investment strategist, Geojit Financial Services.
"If Trump tariff policy continues like this and soon starts impacting other countries it will be bad for global trade and the global economy," he added.
At 10:00 am, BSE Sensex was trading around the 72,908 level mark, down by over 170 points. Whereas, NSE Nifty dropped by over 50 points and was hovering around the psychological 22k level mark.
From the Sensex Pack, Nestle India, HCL Tech, Titan, Bharti Airtel and Infosys were among the laggards.
More Pain Ahead?
Analysts expect so. Even as the GDP growth data remained above 6%, it marked the slowest pace of growth since Q4FY23, excluding the previous quarter. Tariff tensions remain at heightened levels with a divided D-street perception around the current market outlook.
While some believe that the markets are now fairly valued, others are expecting more correction ahead.
"The broader trend remains bearish, favoring a sell-on-rise approach unless Nifty decisively closes above 22,600. Immediate resistance is at 22,300, while key support stands at 22,000. If this support is breached on a closing basis, the next support lies at 21,800," said Vatsal Bhuva, technical analyst at LKP Securities.
However, the Indian stock market is not alone in witnessing the brunt of the market. The US market also witnessed a sharp sell-off. The Dow Jones industrial average dropped over 600 points or 1.4% to settle at 43,191 level. Meanwhile, the S&P 500 index was also down by over 1.7% or 104 points owing to trade tariffs.
"Tariffs will soon raise inflation in the US and the Fed can turn hawkish. The US stock market, which is now priced to perfection, can suffer a severe correction, even a crash. This outcome, which Trump abhors, can tame him and bring about some sanity and balance in his policies. We don’t know when this will happen," said Vijayakumar. Analysts are not expecting any rebound in domestic markets, atleast in the near-term, even as valuations return to fair levels. Investors are advised to remain cautious and wait to see how the scenario unfolds
