Markets in India and across Asia are facing mounting pressures. India’s trade talks with the US remain stalled, raising fears of serious implications for exports. IT services companies are entering a period of distress, with earnings and profit forecasts for the year expected to be revised downward. The banking sector is also under pressure, amid concerns over rising non-performing assets.
Industrial production growth from April to June has dropped from 5.4 percent to just 2 percent. June alone saw growth fall to 1.5 percent—the weakest in 10 months—with mining and electricity sectors particularly affected.
Foreign investors are pulling out of Indian markets, shifting focus to China, Japan and South Korea.
In both Europe and the US, the recently finalised US–EU trade deal has sparked concern rather than confidence. European markets closed lower yesterday, and Asian markets followed suit this morning. Indian markets too remain under pressure.
In the derivatives segment, Gift Nifty closed Monday night at 24,650.00 and rose to 24,679 this morning, suggesting that Indian markets may open lower today.
On Monday, European markets ended with steep losses, with investors judging the new US–EU trade agreement to be burdensome for Europe. Shares of automobile and alcohol firms, including Heineken, declined. Gains made in early trading were reversed later in the day. Despite offering increased capital investment and fuel purchases from Europe, the US has imposed a 15 percent tariff on European imports.
US markets too under-performed on Monday. Although a unilateral deal with the EU was announced, investors felt the agreement could weigh heavily on American companies and consumers.
The Dow Jones declined by 64.36 points (0.14 percent) to close at 44,837.56. The S&P 500 edged up by 1.13 points (0.02 percent) to end at a record high of 6,389.77. The Nasdaq Composite rose by 70.27 points (0.33 percent), also marking a record close at 21,178.58.
US futures showed modest gains this morning: Dow up 0.06 percent, S&P up 0.11 percent, and Nasdaq up 0.25 percent.
Asian markets are trading lower today. All eyes are on the ongoing US–China trade negotiations. The Japanese market opened 0.75 percent lower, South Korea fell by 1 percent, and the Australian market also opened in the red. Hong Kong and mainland Chinese indices were also down.
The Indian IT sector appears to be heading for more trouble. TCS’s decision to lay off 2 percent of its workforce could be the beginning of a broader trend. Other companies are likely to follow suit. New-generation private banks and credit card issuers, which have lent heavily to IT employees, now face looming risks. A slowdown in lending across the banking system may be further exacerbated by the decline in one of its key growth engines.
Trade talks with the US are still stalled. With August 1—this Friday—looming, there are concerns that Indian goods may face tariffs of up to 26 percent if a deal is not reached. The next round of formal negotiations is not expected before mid-August. The Trump administration is now demanding that India eliminate all tariffs on US products as part of the deal’s implementation. In contrast, the India–UK deal exempts 64 percent of goods from tariffs in the first phase, with 99 percent becoming duty-free over the next 10 years. Trump is also unwilling to compromise on his demand for India to open up its agricultural sector.
The markets have clearly signalled their discomfort with these adverse developments—and investors worry the slide could continue.
Barring FMCG, pharmaceuticals and healthcare, most sectors remained weak. Realty, IT, metals, and media stocks were among the worst hit. Small cap stocks fell by 1.26 percent, while mid cap stocks declined by 0.84 percent.
On Monday, the Nifty fell by 156.10 points (0.63 percent) to close at 24,680.90. The Sensex dropped 572.07 points (0.70 percent) to end at 80,891.02. Bank Nifty declined by 444.00 points (0.79 percent) to 56,084.90. The Nifty Midcap 100 lost 490.10 points (0.84 percent) to close at 57,579.35. The Nifty Smallcap 100 dropped by 229.70 points (1.26 percent) to end at 18,064.75.
The broader market breadth remained negative. On the BSE, only 1,200 stocks advanced while 2,951 declined. On the NSE, just 808 stocks rose, with 2,207 falling.
Fifty-seven NSE stocks hit 52-week highs while 62 fell to 52-week lows. Seventy hit upper circuits, while 120 reached lower circuits.
Foreign institutional investors (FIIs) sold shares worth ₹6,082.47 crore in the cash segment on Monday, while domestic institutional investors (DIIs) bought stocks worth ₹6,764.55 crore.
Nifty’s support level has slipped to 24,500. Immediate support is seen at 24,645 and 24,500, while resistance could emerge at 24,830 and 24,980.
The US–EU trade deal dragged gold prices lower again. On Monday, gold fell by $22.10 to close at $3,315.90 per ounce. Prices fell to $3,307 in early trade today before rebounding to $3,315. Further decline remains likely.
In Kerala, gold held steady at ₹73,280 per sovereign on Monday, but prices are expected to fall today. Silver closed at $38.22 per ounce on Monday.
In international markets, rubber rose 1.27 percent to 175.80 cents per kg. Cocoa gained 2.95 percent to $8,574.76 per tonne. Coffee rose 1.11 percent and tea climbed 1.84 percent. Palm oil fell 1.25 percent.
The US dollar index jumped by more than 1 percent on Monday, reaching a high of 98.69 before closing at 98.63. This morning it stood at 98.65.
In currency markets, the euro slipped to $1.1591, the pound to $1.3355, and the Japanese yen to 148.58 per dollar. US 10-year Treasury prices dipped slightly, with yields rising to 4.412 percent.
A stronger dollar caused the rupee to weaken again. After falling in early trade, the dollar rose 15 paise to close at ₹86.67. The Chinese yuan weakened to 7.18 per dollar.
The crude oil market showed signs of recovery. The US–EU deal and ongoing US–China talks are expected to boost demand. Brent crude rose by 2.34 percent to close at $70.04 on Monday. This morning, Brent traded at $70.08, WTI at $66.70, and Murban crude at $72.62. Natural gas prices climbed by 2 percent.
Cryptocurrencies saw volatility. Bitcoin fell below $118,200, while Ether dropped below $3,800.
