Indian stock markets experienced a decline on Thursday, June 12, 2025, influenced by a combination of global factors. Uncertainty surrounding the U.S.-China trade relationship and escalating tensions in the Middle East weighed heavily on investor sentiment, leading to a cautious approach in the markets.
The Nifty 50 and the BSE Sensex both opened flat before edging lower. At 10:13 a.m. IST, the Nifty 50 was down 0.16% at 25,101.3, and the BSE Sensex fell 0.2% to 82,355.26. Broader market indices, including small-caps and mid-caps, also saw declines of around 0.3%.
US-China Trade Deal Uncertainty
Hopes for a detente in trade relations between the United States and China were tempered by a lack of concrete details regarding a potential agreement. While U.S. President Donald Trump indicated that a framework on tariff rates had been reached to revive trade discussions, the absence of specific information left investors wary.
VK Vijayakumar, chief investment strategist at Geojit Investments, noted that the "tariff crisis is not over yet," emphasizing the need for official confirmation from China and raising concerns about President Trump's credibility. Trump's announcement of potential unilateral tariffs within two weeks further fueled market unease, causing U.S. index futures and the dollar to weaken as investors sought safer assets like gold.
Middle East Tensions
Geopolitical tensions in the Middle East added to the negative sentiment. Escalating security risks, particularly those involving Iran and the United States, have the potential to disrupt the global supply of oil, a crucial commodity for India. Iran's threat to strike U.S. bases in the Middle East should nuclear talks fail heightened these concerns.
The rise in Brent crude prices to $70 a barrel due to these tensions is a significant negative for India, which relies heavily on oil imports. Sectors such as paints, adhesives, tyres, and aviation are expected to be negatively impacted by rising crude oil prices, while oil producers like ONGC and Oil India could benefit.
Sectoral Performance
Heavyweight IT stocks were among the top losers, falling by 1%. Indian IT companies generate a significant portion of their revenue from the United States, making them particularly vulnerable to trade tensions and protectionist policies.
Conversely, shares of upstream oil producers ONGC and Oil India surged, tracking the rise in global crude oil prices.
Expert Opinions and Market Outlook
Analysts suggest that the Indian market is likely to remain range-bound in the near term, lacking clear positive triggers for substantial upward movement. The combination of global trade uncertainties and geopolitical risks is expected to keep investors cautious.
Impact on Gold Prices
Gold prices edged higher as escalating tensions in the Middle East drove safe-haven demand. Weaker-than-expected U.S. inflation data also bolstered hopes of potential rate cuts by the Federal Reserve, further supporting gold prices.
FII and DII Activity
On Wednesday, foreign portfolio investors (FIIs) were net sellers, while domestic institutional investors (DIIs) were net buyers, indicating a mixed sentiment among investors.
In conclusion, the Indian stock market's decline on Thursday reflects the impact of global uncertainties. Ambiguity surrounding the U.S.-China trade deal and escalating tensions in the Middle East have dampened investor risk appetite, leading to a cautious approach.
