Here's what is sending stock market on a downward spiral

Mumbai: Benchmark indices Sensex and Nifty fell sharply in early trade on Wednesday as concerns over a trade war and continued foreign fund outflows weighed on investor sentiment. The 30-share BSE benchmark Sensex declined 274.56 points to 76,019.04 in early trade. The NSE Nifty dropped 78.45 points to 22,993.35.

Both the benchmark indices further declined in the trade with the Nifty falling below the crucial 23,000-mark to trade at 22,950.25 (at 10.52 am) down 121.55 points. The BSE benchmark gauge also dropped below 76,000-level to quote at 75,834.14 (at 10.52 am), down 459.46 points. 

Over the past five days, Sensex has lost 2,290.21 points or 2.91 per cent, while Nifty has fallen 667.45 points or 2.81 per cent. Among the 30-share blue-chip stocks, Mahindra & Mahindra, Zomato, Reliance Industries, Axis Bank, IndusInd Bank, Asian Paints, ITC, and Adani Ports were the biggest losers. On the other hand, Tata Consultancy Services, Infosys, Tech Mahindra, HCL Tech, and Hindustan Unilever saw gains.

Foreign Institutional Investors behind dip

Foreign Institutional Investors (FIIs) sold equities worth ₹4,486.41 crore on Tuesday, according to exchange data. "Dalal Street is gripped by pessimism as fears mount over further declines if Nifty slips below the crucial 23,000-mark. Key factors weighing on sentiment include ₹1 lakh crore in FII outflows this year and ongoing concerns about Trump's tariff threats," Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said.

In Asian markets, Shanghai was trading lower, while Seoul, Tokyo, and Hong Kong were in the green. On Wall Street, US markets ended mostly higher on Tuesday. Global oil benchmark Brent crude dipped 0.34 per cent to USD 76.74 a barrel. Declining for the fifth day running on Tuesday, the BSE Sensex dropped 1,018.20 points or 1.32 per cent to settle at a two-week low of 76,293.60. The Nifty cracked 309.80 points or 1.32 per cent to 23,071.80.

Experts signal caution as indices struggle under pressure

Experts stated that markets are under pressure due to tariffs imposed by Trump and consistent FII selling. The meeting between PM Modi and Trump will be watched closely for any outcomes related to closer cooperation on defense, energy, the China+1 strategy, and a glide path for tariffs between both countries.

Ajay Bagga Banking and Market Experts told ANI, "Steel and Aluminum tariffs of 25 per cent were announced by the Trump administration. For India, Prime Minister Modi's summit with President Trump will be watched closely for any policy outcomes of closer cooperation on defence, energy, China+1 and a glide path for tariffs. As such we are cautious given continued FPI selling and pressure on small and midcaps. US CPI numbers today are expected at 3.1 per cent YoY and 0.3 per cent MoM for Core US CPI. Any number above that could lead to a minor risk off. Caution advised till a durable bottom is identified".

In the sectoral indices today, the highest selling pressure was witnessed in the Oil and Gas sector, while the Nifty Media index opened with the highest gains of 0.4 percent. Nifty Auto and Nifty FMCG were almost flat, leaning towards the red.

"Broader benchmarks underperformed, with nearly 96 per cent of the NSE 500's constituent members ending in the red. Prevailing sentiment is undoubtedly weak, but with less than 10 per cent of the stocks in this benchmark under their 100-day averages, we are at a point where the decline is at a very mature stage, and that means the risk of a rebound remains high. For the day, support lies in the 22900 - 22970 area, while resistance rests between 23250 and 23300" said Akshay Chinchalkar, Head of Research, Axis Securities. 

Agencies