The Indian stock market is navigating a complex landscape, influenced by a mix of global cues and domestic factors. Several key developments overnight have set the stage for today's trading session, impacting investor sentiment and market direction.
One significant indicator is the Gift Nifty, which is trading around 25,568, approximately 38 points higher than the previous close of Nifty futures. This suggests a potentially positive opening for Indian indices like the Sensex and Nifty 50.
However, market sentiment remains cautious due to looming U.S. tariffs, particularly those proposed by former U.S. President Donald Trump. Specifically, there are concerns about the Sanctioning Russia Act of 2025, which could allow the U.S. to impose tariffs as high as 500% on countries that continue to purchase Russian oil and energy products. India, having increased its imports of Russian oil to manage fuel costs and inflation, faces direct exposure to this risk. The market is reacting to this uncertainty, as the U.S. is India's largest export destination, and higher tariffs could make Indian goods more expensive, hurting demand and company profits.
These tariff concerns have already manifested in existing tariffs of around 50% on certain Indian goods linked to concerns over Russian trade, impacting some export segments with slower shipments and reduced demand from the U.S. The potential for further increases amplifies the anxiety among investors.
On Wednesday, the Indian stock market closed with the Sensex falling by 176 points (0.21%) to 83,536.08, and the Nifty 50 dropping 46 points (0.18%) to settle at 25,476.10. This snapped a three-day winning streak. Adding to the volatility is the impending Q1 earnings season, with TCS (Tata Consultancy Services) being the first to announce results. Weekly expiry may also contribute to market fluctuations.
Mixed cues from Asian markets are also playing a role. Following Trump's announcement of a 50% tariff on Brazilian imports, effective August 1, Asian markets opened on a mixed note. Japan's Nikkei 225 and Topix indices fell, while South Korea's Kospi and Kosdaq, and Australia's ASX 200 advanced.
In contrast, U.S. markets ended higher on Wednesday, with the Nasdaq surging, briefly pushing Nvidia's market cap to $4 trillion. The Dow Jones, S\&P 500, and Nasdaq Composite also saw gains, supported by Federal Reserve minutes suggesting that tariff-driven inflation may not derail rate cuts. However, Federal Reserve Bank of New York President John Williams has stated that the central bank faces no near-term pressure to alter its monetary policy stance.
Concerns about global growth and demand for industrial metals have led to a decline in the metals and mining sector, while uncertainty around Russian crude and global oil supply has impacted the oil and gas sector. The hardware technology and equipment sector is also showing concerns related to global trade, exports, and capital spending.
