Investor enthusiasm across global markets is beginning to fade as trade negotiations fail to produce concrete outcomes and inflation data looms large. Focus has shifted to retail inflation figures due in the US today and in India tomorrow. Meanwhile, the World Bank has warned that trade tensions could significantly slow US economic growth and has lowered India’s growth forecast to 6.3 percent – the same level earlier projected by the International Monetary Fund (IMF).
Trade discussions between India and the United States concluded without a definitive agreement, although both sides indicated talks would continue in the coming weeks. This lack of clarity has disappointed markets. Meanwhile, the US-China trade negotiations are moving forward based on a framework previously agreed upon in Geneva. Both presidents must now formally endorse that framework before talks can proceed further, according to officials who attended the latest round in London.
China reportedly maintained its position that it would only ease restrictions on rare earth exports if the US lifts controls on advanced technology and chip exports to China. The lack of breakthrough pushed US futures lower.
US inflation is expected to show only marginal growth, while Indian inflation is likely to edge close to 3 percent, according to analysts.
In the derivatives market, Gift Nifty closed at 25,198.5 on Tuesday night and slipped to 25,166 in early Wednesday trade, indicating a cautious market opening.
European markets were mixed on Tuesday as investors awaited the outcome of the US-China talks. UK stocks hovered near record highs amid expectations of interest rate cuts, while European defence stocks declined after China withheld rare earth supplies.
In the US, major indices rose for a third straight day on optimism over the trade talks. The Dow Jones Industrial Average added 105.11 points (0.25 percent) to close at 42,866.87. The S&P 100 gained 32.93 points (0.55 percent) to 6,038.81, while the Nasdaq Composite climbed 123.75 points (0.63 percent) to 19,714.99.
Tesla shares surged 5.67 percent, recovering from recent losses following tensions between CEO Elon Musk and President Donald Trump. The rally was supported by speculation that the US government may back Tesla’s robotaxi plans. Trump’s recent remarks distancing himself from the dispute and affirming his continued use of Tesla cars also helped sentiment. However, Tesla faces falling EV sales in China and Europe, and several brokerages have revised their price targets downward while recommending a sell.
Indian equities saw a choppy session on Tuesday. After a strong start, profit-booking at higher levels dragged the indices lower. Investors are unsure whether the current rally has lasting momentum. While IT and media stocks performed well, banking, financials and real estate stocks came under pressure.
The Nifty closed marginally higher by 1.05 points at 25,104.25. The Sensex slipped 53.49 points to 82,391.72. The Bank Nifty declined 210.50 points (0.37 percent) to 56,629.10. Meanwhile, the Nifty Midcap 100 rose 6.45 points (0.01 percent) to 59,681.40 and the Smallcap 100 gained 26.40 points (0.14 percent) to 18,899.80.
Market breadth was positive with 2,177 advancing stocks and 1,876 declining on the BSE; on the NSE, 1,607 stocks advanced while 1,301 declined. Notably, 105 NSE stocks hit 52-week highs, while 14 touched lows.
Foreign institutional investors were net buyers of ₹2,301.87 crore, while domestic funds purchased equities worth ₹1,113.34 crore.
Nifty faces strong resistance in the 25,200–25,300 range, with immediate support seen at 25,065 and 25,000. Resistance may reappear near 25,180 and 25,260.
Anil Ambani’s Reliance Power jumped 11.25 percent to ₹71.89, extending its one-month rally to 68 percent and its five-day gain to 19 percent. From a low of ₹1.10 in March 2020, the stock has surged over 7,000 percent. The rally is attributed to debt reduction, new capital infusion, favourable court rulings, and plans to expand into solar power and battery storage.
Reliance Infrastructure also rose 4 percent following a positive arbitration ruling.
Maruti has suspended production of its EV, the eVX, until September due to a shortage of rare earth magnets. Other manufacturers such as Tata Motors, Mahindra & Mahindra, and Hyundai are also facing supply constraints. While India had planned to import 700 tonnes of rare earth magnets this year, up from 460 tonnes in 2023, China – which controls 90 percent of global output – has imposed export restrictions, derailing those estimates.
Gold saw wide swings amid trade talk speculation, moving between $3,304 and $3,346 per ounce before settling at $3,323.79. Early Wednesday, prices rose to $3,334 before easing slightly to $3,330. In Kerala, gold slipped by ₹80 to ₹71,560 per sovereign.
Silver remained strong, closing at $36.55 per ounce after touching $36.88. Analysts expect a continued deficit in silver supply until 2030, potentially driving prices towards $40 per ounce.
Rubber rose 1.18 percent in international markets to 163.40 cents/kg. Cocoa fell 6.25 percent to $9,570.15 per tonne, coffee dropped 1.88 percent, and tea climbed 0.88 percent.
The dollar index edged up marginally to close at 99.10. In currency markets, the euro strengthened to $1.142, the pound stood at $1.349, and the yen weakened to 144.91 per dollar.
US 10-year bond yields eased to 4.468 percent. The rupee recovered from early weakness and closed at 85.60 against the dollar, up three paise. China’s yuan remained at 7.18 per dollar.
Crude oil prices slipped on doubts over progress in the US-China trade talks. Brent was trading at $66.57 a barrel, WTI at $64.72, and Murban crude at $66.80.
Cryptocurrencies remained elevated, with Bitcoin near $109,800 and Ether rising towards $2,800. Market sentiment may shift depending on the outcome of US-China trade discussions.
