Dalal Street experienced sharp declines on Thursday, with the Sensex and Nifty indices dropping by over1% during the afternoon session. This share fall occurred despite markets erasing early losses as the S&P BSE Sensex fell by 911 points to 81,603.95 and the NSE Nifty50 lost 288.75 points to 24,854.45 by 2:29 pm.
The market’s volatility was evident as it struggled to maintain gains throughout the day, reflecting investor uncertainty. The fluctuations were a clear indication of the market’s sensitivity to global events and investor sentiment.
The fall was primarily driven by uncertainties surrounding the U.S.-China trade deal and escalating tensions in the Middle East, which have negatively impacted investor confidence. While both U.S. and Asian markets showed a muted response, Wall Street equities also witnessed declines due to the same geopolitical pressures.
US-China Trade Deal
U.S. President Donald Trump announced a framework for tariff rates as part of efforts to mend the fragile truce with China. Although this announcement initially boosted investor optimism, the absence of specific details left markets uneasy.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said, “There are reports of a possible agreement between the U.S. and China. But the Chinese haven’t officially confirmed anything.”
He added that President Trump’s proposal of a 55% tariff on China and 10% on the U.S., alongside plans for universal tariffs, adds to market apprehension. The lack of clarity on these matters continues to weigh heavily on investor decisions, creating a sense of unpredictability in the market.
Impact of Middle East Tensions
Geopolitical instability in the Middle East further compounded market woes. Iranian threats to U.S. bases in the region if nuclear discussions fail have heightened security risks, contributing to a spike in Brent crude prices to $70 per barrel.
Analysts warned that this development could adversely affect various sectors in India, such as paints, adhesives, tyres, and aviation, while potentially benefiting companies like ONGC and Oil India.
“As European markets opened lower due to concerns about the Middle East escalations, that brought the Nifty to below 25,000 level and we are witnessing a profit booking in the market at this point of time,” said Kranthi Bathini, Equity Strategist at WealthMills securities Pvt Ltd.
The downturn affected multiple sectors, with heavyweight IT stocks falling by 1%. The IT sector’s exposure to the U.S. market is considerable, making it particularly sensitive to international trade dynamics.
Additionally, small-cap and mid-cap indices saw over 1% declines, with most broad market indices trading in the red. Only three sectoral indices managed to stay positive. The broader market’s performance highlights the widespread impact of global uncertainties on investor sentiment, with few areas showing resilience.
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