Foreign markets, excluding the US, declined on concerns over trade tariffs. Asian markets opened lower on Tuesday as well. The ongoing delays in trade talks between India and the US are weighing on investor sentiment. Meanwhile, the weakening US dollar is raising fears of reduced competitiveness for European, Japanese and Chinese exports.
While New Delhi sources confirmed that talks with the US had hit a deadlock, signals from Washington remained more optimistic. India is under intense political pressure to continue opposing concessions on key sectors such as agriculture, dairy products and genetically modified items. However, industry representatives are urging compromise, warning that failure to reach a deal could trigger retaliatory tariffs as high as 26 percent on Indian exports. These would come on top of the common 10 percent base tariff, severely impacting sectors like textiles, seafood, leather goods and jewellery. Industry bodies caution that this could result in massive job and income losses.
India’s industrial output growth dropped to a nine-month low of 1.2 percent in May, down from 2.7 percent in April. Factory output slowed from 5.1 percent to 2.6 percent, with FMCG production also weakening. These indicators have raised concerns over first-quarter GDP growth, likely to affect market sentiment on Tuesday.
In derivatives trade, Gift Nifty closed at 25,632.50 on Monday night and moved to 25,667 on Tuesday morning before easing. This suggests the market may open with marginal gains.
European markets ended lower on Monday due to concerns over the US tax bill. A proposed tax hike on wind energy dented shares of German firm Vestas Wind by 8 percent. Bayer fell 5 percent after the US Supreme Court deferred a ruling on its Monsanto-linked herbicide case.
In contrast, the US market ended Monday on a high, with both the S&P and Nasdaq closing at record levels. The rollback of Canada’s digital services tax following Trump’s threats boosted tech stocks. Meta Platforms soared to a new high after Mark Zuckerberg announced major AI lab investments. Tesla shares, however, declined after Elon Musk criticised Trump’s tax proposals again.
For the April–June quarter, the S&P rose 10 percent, Nasdaq 18 percent, and the Dow 5 percent. Despite this strong performance, UBS Financial Services warned of high volatility and potential corrections ahead. They expect a slowdown in economic growth and anticipate a one percent rate cut from the Fed.
The Dow Jones closed 275.50 points (0.63 percent) higher at 44,094.77. The S&P rose 31.88 points (0.52 percent) to end at 6,204.95, while the Nasdaq gained 96.27 points (0.47 percent) to close at 20,369.73.
US futures opened lower but turned positive. The Dow, S&P and Nasdaq futures were up by 0.10, 0.06 and 0.04 percent respectively.
Asian markets opened weak on Tuesday. Japan’s Nikkei was down 1 percent in early trade, while South Korea gained 1.67 percent. Chinese markets also opened lower.
After four consecutive sessions of gains, Indian markets ended in the red on Monday. Foreign investors turned net sellers on the NSE, while the rupee weakened.
The failure to reach even an interim trade deal with the US before the July 9 deadline could subject Indian exports to an additional 26 percent tariff. On top of the existing 10 percent, this would render many Indian goods uncompetitive. Agricultural opposition is reportedly the main stumbling block, with groups such as the Swadeshi Jagaran Manch lobbying against concessions. Market participants believe that even a partial breakthrough could spark a rally.
On Monday, the Nifty fell 120.75 points (0.47 percent) to close at 25,517.05. The Sensex dropped 452.44 points (0.54 percent) to settle at 83,606.46. Bank Nifty slipped 131.15 points (0.23 percent) to 57,312.75. However, the Midcap 100 index gained 356.05 points (0.60 percent) to 59,741.20, and the Smallcap 100 index rose 98.30 points (0.52 percent) to 19,075.10.
The market breadth remained positive. On the BSE, 2,320 stocks advanced while 1,800 declined. On the NSE, 1,752 stocks rose and 1,186 fell.
On the NSE, 93 stocks hit 52-week highs, while 26 touched lows. Upper circuit limits were hit by 144 stocks, and 67 hit lower circuits.
Foreign investors sold equities worth ₹831.50 crore in the cash market on Monday, while domestic funds bought ₹3,497.44 crore worth of shares. In June, FPIs invested ₹7,488.98 crore and DIIs ₹72,673.91 crore in Indian equities.
Despite Monday’s disappointment, analysts expect consolidation today. Nifty is seen finding support at 25,475 and 25,430, with resistance at 25,625 and 25,675.
Sigachi Industries shares plunged 14 percent after a fatal factory explosion at its Telangana plant. The company manufactures microcrystalline cellulose powder.
Raymond shares rallied 15 percent and Raymond Lifestyle jumped 16 percent on Monday ahead of Raymond Realty’s listing. From their April lows, both have gained nearly 65 percent.
The government has indicated that the IDBI Bank stake sale framework will be announced in early September. The stock gained 5 percent on Monday.
IndusInd Bank has submitted a shortlist of candidates for the MD-CEO role to the RBI. Axis Bank Deputy MD Rajiv Anand tops the list, followed by Rahul Shukla (ex-HDFC Bank) and Anup Saha (Bajaj Finance).
Gold rallied past $3,300 per ounce on Monday, exceeding earlier expectations of $3,200. It later settled at $3,308.72 and rose again on Tuesday morning to $3,213.
In Kerala, gold prices fell ₹120 per sovereign on Monday to ₹71,320 – the lowest in June. Silver climbed to $36.08 per ounce.
In international markets, rubber fell 0.80 percent to 161.60 cents/kg. Cocoa dropped 3.02 percent to $9,161.21 per tonne. Coffee gained 0.66 percent, while tea remained unchanged. Palm oil prices declined 0.15 percent.
The US dollar index fell to 96.68 on Tuesday morning after closing at 96.88 on Monday. In forex markets, the dollar weakened across the board. The euro stood at $1.1795, the pound at $1.3743, and the Japanese yen rose to 143.54 per dollar. Yields on 10-year US Treasury bonds declined to 4.222 percent. The rupee closed weaker on Monday, falling 28 paise to end at 85.76 against the dollar. The Chinese yuan strengthened to 7.16 per dollar.
Crude oil prices rose and then eased, amid reports of increased OPEC production. Brent crude stood at $67.61 per barrel on Tuesday morning. WTI was at $64.02 and Murban crude at $68.91. Natural gas prices showed a marginal decline.
Cryptocurrencies also recovered after an initial fall. Bitcoin climbed to $107,500, while Ether remained below $2,500.