India’s trade negotiations with the United States have hit a patch of uncertainty, with mounting pressure from Washington for New Delhi to allow unrestricted access to American goods. Yesterday's decision by Vietnam to yield to US demands and sign a sweeping trade agreement is seen as having weakened India’s bargaining position.
In contrast, India has signalled willingness to sign a 10-year defence cooperation pact with the US, hoping it would positively influence trade talks. However, analysts remain divided on whether the market is consolidating or correcting, with valuation concerns and continued foreign investor selling weighing on sentiment.
Derivatives data suggests a mildly positive start for Indian equities, with Gift Nifty rising from Wednesday night’s close of 25,556.50 to 25,574 on Thursday morning.
European markets ended mostly higher on Wednesday, but the UK’s FTSE 100 declined amid political tensions within the Labour Party. A rift between Chancellor Rachel Reeves and Prime Minister Keir Starmer over fiscal tightening has sparked rumours of Reeves’ potential resignation. The uncertainty has affected both the pound and British government bonds.
US markets ended mixed overnight. While the Dow Jones slipped marginally by 10.52 points (0.02%) to close at 44,484.42, the S&P 100 rose 29.41 points (0.47%) to 6,198.01 and the Nasdaq gained 190.24 points (0.94%) to end at 20,393.13.
Although the US-Vietnam trade pact cheered markets, negotiations with other key partners such as the EU, Canada, Japan, India and Mexico remain unresolved, with no clarity on whether any deals will be finalised before the self-imposed July 9 deadline.
The Vietnam deal allows US goods duty-free access and lets the US import 20 percent of Vietnamese goods and up to 40 percent of re-exported goods duty-free. This approach is unlikely to be acceptable to other nations and could lead to higher costs for American consumers.
Markets were also rattled by a private sector jobs report showing a decline of 33,000 jobs last month, against expectations of a 100,000 increase. Official employment data is due Thursday, with a projected 110,000 gain. A shortfall could push the Federal Reserve to consider a rate cut this month.
Meanwhile, Tesla’s vehicle sales continued to decline, but its stock still rose five percent on Wednesday.
US President Donald Trump’s flagship tax bill failed to pass the House of Representatives due to internal Republican opposition. Efforts are underway to secure its passage on Thursday.
US futures indicate marginal gains, with the Dow up 0.07 percent, S&P 0.04 percent, and Nasdaq 0.03 percent. Asian markets opened mixed, with Japan’s Nikkei rebounding after a soft start, Korea up 0.80 percent, while Hong Kong and China opened lower, reacting to the US-Vietnam deal.
Indian markets closed lower on Wednesday, reversing some losses later in the session, but remained under pressure. Sentiment was dampened by fears that the India-US trade talks could end unfavourably, especially in light of the Vietnam agreement, which suggests Washington may not settle for anything less than full access to Indian markets.
The Nifty fell 88.40 points (0.35%) to close at 25,453.40. The Sensex declined 287.60 points (0.34%) to 83,409.69. The Bank Nifty was hit harder, losing 400.25 points (0.80%) to 56,999.20. The Nifty Midcap 100 slipped 82.80 points (0.14%) to 59,667.25, while the Smallcap 100 index dropped 78.60 points (0.41%) to 18,977.10.
Market breadth was negative, with 2,277 stocks declining on the BSE against 1,736 advancing. On the NSE, 1,720 stocks fell while 1,205 advanced.
Foreign institutional investors (FIIs) continued to offload shares, selling a net ₹1,561.62 crore on Wednesday. Domestic institutional investors (DIIs) purchased shares worth ₹3,036.68 crore.
Technically, Nifty’s fall below the 25,500 mark signals weakness. Support is seen at 25,200–25,400, with resistance at 25,570–25,625.
In a significant blow to industrialist Anil Ambani, the State Bank of India has classified Reliance Communications (RCom) as a fraudulent account and will report the finding to the Reserve Bank of India. The fraud identification was made by SBI’s internal committee.
RCom shares closed at ₹1.57 on Wednesday. Other Ambani-led firms, Reliance Infrastructure and Reliance Power—which had recently shown signs of revival—also declined by over 2.5 percent. Reliance Infra ended at ₹397, and Reliance Power at ₹68.
SBI had declared RCom’s loan as non-performing back in 2017. Anil Ambani’s lawyers claimed the move contradicts Supreme Court rulings.
Gold rose sharply to touch $3,366 per ounce on Wednesday, buoyed by a weaker dollar, before easing to $3,345 on Thursday morning. In Kerala, the price of gold rose by ₹360 to ₹72,520 per sovereign (8 grams). Silver traded higher at $36.32 per ounce.
Rubber rose 1.54 percent in global markets to 165 cents per kg. Cocoa slumped 6.69 percent to $8,156.86 per tonne. Coffee gained 0.25 percent. Tea remained stable, and palm oil rose 0.39 percent.
The US dollar index declined slightly to close at 96.78, and slipped further to 96.70 on Thursday morning. In currency markets, the euro strengthened to $1.1809, while the pound weakened to $1.365 due to UK political instability. The yen traded at 143.60 per dollar.
The rupee fell 18 paise to close at 85.70 against the dollar. The Chinese yuan held steady at 7.17 per dollar.
US 10-year Treasury yields edged up to 4.265 percent.
Brent crude oil climbed $2 to close at $69.11 per barrel, supported by Iran’s decision to end cooperation with the UN’s atomic watchdog and lower shale output in the US. On Thursday morning, Brent was slightly down at $68.85. WTI traded at $67.19 and Murban crude at $70.03. Natural gas prices rose 0.45 percent.
Cryptocurrencies rallied, with Bitcoin hitting $109,000 and Ethereum climbing to $2,600. Other digital tokens also saw gains.
Market snapshot (as of July 2)
Sensex — 83,409.69 ▼0.34%
Nifty 50 — 25,453.40 ▼0.35%
Bank Nifty — 56,999.20 ▼0.80%
Midcap 100 — 59,667.25 ▼0.14%
Smallcap 100 — 18,977.10 ▼0.41%
Dow Jones — 44,484.42 ▼0.02%
S&P 100 — 6,198.01 ▲0.47%
Nasdaq — 20,393.13 ▲0.94%
Dollar — ₹85.70 ▲₹0.18
Gold (oz) — $3,363.34 ▲$24.45
Gold (sovereign) — ₹72,520 ▲₹360
Brent crude — $69.11 ▲$2.00