Even as the Indian stock markets are closed today due to the Ganesh Chaturthi festival, Gift Nifty signaled mildly weak sentiments around noon, on the back of 50% Trump tariffs coming into effect and lackluster Asian trade.
Except for Japan’s Nikkei 225, most Asian markets were in the red. Hong Kong’s Hang Seng slipped 1% around 2:36 p.m. local time (12:20 p.m. IST), while China’s Shanghai Composite was down by a similar margin. Singapore’s Straits Times Index hovered flat with a slight negative bias. Japanese Nikkei ended with gains of 0.3%.
Gift Nifty signaling a weak trade today was an extension of Tuesday’s trade. The Indian headline indices BSE Sensex and Nifty ended with sharp cuts of over 1% the previous day. While Nifty fell 255.70 points to close at 24,712.05, the 30-stock S&P BSE Sensex finished at 80,786.54, declining by 849.37 points.
The U.S. Department of Homeland Security on Monday outlined the procedure to implement additional tariffs on Indian goods starting Wednesday. The tariffs risk slowing growth in India as exporters face U.S. duties of up to 50% – among the highest imposed by the Trump administration.
Speaking to ET Now, trade expert Geoff Dennis noted that while some of former President Trump’s tariff threats have historically been symbolic, the proposed 50% tariff on India appears to be a firm policy.
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“India will have to adjust its economic approach if these tariffs are implemented. At the same time, the country should continue diplomatic engagement with the US to explore possibilities of reducing the burden,” Dennis said.Dennis emphasised that India is likely to strengthen trade relations with other global partners, including Europe, the UK, ASEAN countries, and regional neighbors, as a way to diversify its trade footprint. “Trade with the US may be handicapped in the near term, but there are significant opportunities in other markets,” he added.When markets reopen on Thursday, bulls will not only have to navigate tariff impact but also the Nifty expiry.3 key things to watch out for:
1) Trump tariffs
Trump tariffs on India: The step follows US President Donald Trump’s Executive Order 14329, signed earlier this month, which directs agencies to act against what Washington calls threats linked to Russia and its trade partners. A wide range of Indian goods is covered under the new decision.
India has denounced the additional duties as “unfair, unjustified, and unreasonable.” Officials expressed hope that progress in peace talks could pave the way for a rollback of tariffs, but emphasized that New Delhi will firmly safeguard its national interests. Prime Minister Narendra Modi reinforced this stance during a rally in Ahmedabad on Monday.
“No matter how much pressure comes, we will keep increasing our strength to withstand it. Today, the Atmanirbhar Bharat Abhiyan is getting a lot of energy from Gujarat, and behind this are two decades of hard work,” Modi said.
2) Monthly expiry
Tomorrow will be the last time when Nifty will expire on Thursday. Currently, weekly Nifty and stock derivative contracts expire every Thursday, while monthly, quarterly, and half-yearly contracts expire on the last Thursday of the relevant expiry month. Starting August 29, all new contracts and existing open positions will reflect Tuesday as the new expiry date.
3) FII/DII action
Action from Foreign Institutional Investors (FII) will be keenly watched following the Trump action. On Tuesday, FIIs sold Indian equities worth Rs 6,516.49 crore, extending their August selling spree to Rs 23,255. The domestic institutional investors (DIIs) were net buyers in yesterday’s session at Rs 7,060.37 crore.
A PTI report quoted forex traders saying that the rupee lost momentum as worries over the 25% additional US tariff on Indian goods loomed.
Investors should also watch out for rupee movement versus the dollar. The rupee depreciated 12 paise to close at 87.68 against the US dollar on Tuesday, tracking weak domestic markets after the US issued a draft notice on plans to implement an additional 25% tariff on Indian products. At the interbank foreign exchange market, the rupee opened at 87.74, then touched an early high of 87.63 and an intraday low of 87.80 against the US dollar. The domestic unit settled at 87.68, registering a decline of 12 paise over its previous close.
Nifty technical and outlook
Commenting on the Tuesday trade, Rupak De, Senior Technical Analyst at LKP Securities, highlights Nifty breaking below the support level of 24,800 after the 256-point debacle. “Decline was severe, pushing the index under the critical 50-day EMA. The RSI has entered a bearish crossover, indicating weakening price momentum. In the short term, the index is likely to remain under selling pressure as long as it trades below 24,850. On the downside, the correction could extend towards 24,150 or lower,” he warned.
Market expert Hrishikesh Yedve, AVP Technical and Derivative Research, Asit C. Mehta Investment Intermediates, is advising short-term traders to adopt a sell-on-bounce strategy. He places immediate support near 24,635, where the 100-DEMA is located. “Technically, on the daily chart, the Nifty formed a big bearish candle and broke below the 50-DEMA support at 24,840, indicating fresh weakness,” he added.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)