Equity Markets See Early Gains Amid Foreign Fund Inflows, But Volatility Follows
This upward momentum was primarily driven by strong foreign fund inflows and the rally in US markets, which ended the previous session on a positive note.
Mumbai: The Indian stock markets opened on a strong note on Wednesday, fueled by fresh inflows from foreign institutional investors (FIIs) and a positive performance in global markets, particularly in the United States.
However, concerns over potential trade tensions following US President-elect Donald Trump’s tariff threats introduced volatility during the morning session.
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Markets Open Higher Amid Positive Global Sentiment
The benchmark BSE Sensex surged 166.1 points to reach 80,170.16 points in the opening trade, while the NSE Nifty gained 74.35 points, touching 24,268.85 points. This upward momentum was primarily driven by strong foreign fund inflows and the rally in US markets, which ended the previous session on a positive note.
Volatility Creeps In as Tariff Concerns Weigh on Sentiment
Despite the initial optimism, the markets became volatile as the day progressed. The BSE Sensex was trading 60.26 points higher at 80,055.58, while the Nifty was up by 16.55 points at 24,211.10. This volatility was attributed to renewed concerns over trade tensions, particularly following tariff threats made by President-elect Donald Trump.
Trump’s recent statements about imposing tariffs on imports from China, Mexico, and Canada sparked fears of a potential trade war, leading to market uncertainty. Prashanth Tapse, Senior Vice President of Research at Mehta Equities, noted that these tariff threats dampened market sentiment, adding fuel to ongoing concerns about global trade relations.
Sector-wise Performance and Stock Highlights
Among the 30 stocks on the Sensex, Mahindra & Mahindra, Kotak Mahindra Bank, Adani Ports, HCL Technologies, Tech Mahindra, and NTPC were notable gainers. On the flip side, stocks like IndusInd Bank, Bharti Airtel, Tata Steel, and UltraTech Cement saw losses during the early part of the session.
The market’s performance was also bolstered by the FII inflows, with foreign investors purchasing equities worth ₹1,157.70 crore on Tuesday, according to exchange data. This continued foreign buying suggests strong investor confidence, despite global uncertainties.
US Markets Provide a Lift, But Concerns Linger
While the Indian markets were off to a strong start, the international markets were also in the green. US markets ended the previous day on a positive note, adding optimism to global investor sentiment. However, the looming tariff threats from President-elect Trump remained a source of concern.
Trump has already announced plans for significant tariffs, including a 25% levy on imports from Mexico and Canada, and an additional 10% tariff on Chinese imports. The global markets are awaiting the reactions of these countries, which could have broader implications for trade dynamics.
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V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, mentioned that while the US markets ended positively, the immediate reaction to Trump’s tariff threats and the uncertainty surrounding future trade policies have the potential to keep markets in a state of volatility. “How these countries react to these tariffs remains to be seen, but it’s clear that these actions could escalate tensions,” he stated.
Market Outlook: Consolidation Expected
Looking ahead, market experts predict that the Indian stock market may consolidate around current levels. V K Vijayakumar suggests that there are no immediate catalysts for a breakout or a breakdown, meaning the market may hover in a range for the foreseeable future.
Global Oil Prices Remain Stable
In other global developments, oil prices saw a minor increase. The global benchmark Brent crude oil price climbed 0.05% to reach USD 72.85 per barrel. Oil prices have been a key factor in global economic sentiment, with fluctuations often impacting investor decisions in related sectors.
Previous Market Performance
The previous session saw a slight decline in the Indian stock markets. The BSE Sensex fell by 105.79 points or 0.13%, closing at 80,004.06 points. Similarly, the Nifty dipped by 27.40 points or 0.11%, settling at 24,194.50 points.
Conclusion: Mixed Sentiment Prevails
The Indian equity markets began the day on a positive note, supported by strong foreign fund inflows and a positive outlook from global markets. However, volatility crept in as concerns over US tariff threats began to affect investor sentiment. With no clear trigger for a breakout, markets are expected to consolidate in the near term. Investors will be closely monitoring both domestic developments and international trade relations, as these factors could play a significant role in shaping the market’s direction in the coming days.
As market participants continue to navigate through a mix of domestic and global factors, staying informed about economic policies and trade developments will be key for anticipating market movements.
