Stock Market Fall: In less than one hour after markets opened on Tuesday, the NSE Nifty 50 fell below the support level and the BSE Sensex lost nearly lost 700 points as weak global cues weighed on the markets.
The indices were trading 0.74% and 0.70% down, respectively as of 10:38 a.m. The market-cap of Nifty 50 companies declined Rs 1.4 lakh crore to Rs 192.05 lakh crore. The NSE India Volatility Index jumped 6.55% to 12.53. The index jumped after dropping over 7% shortly after open, which indicated the existing uncertainty among market participants.
The deadline for the US to impose additional 25% on India is Wednesday. Meanwhile, the administration in the US has already outlined a plan to impose total 50% tariff on Indian imports in a draft notice, as reported by Bloomberg. The draft notice is signaling no respite for Indian goods from high US tariff. India is already facing 25% tariff which came into effect from Aug 7.
"Globally, markets traded on a negative note, while Foreign Institutional Investors (FIIs) continued to remain net sellers, highlighting cautious undertones in the broader trend," said Hardik Matalia, a derivative analyst, Choice Broking. Here are four key factors weighing on markets today:
Four Key Factors Dragging Sensex, Nifty:
1.Trade Tariff Tension Weighs
The steep tariff rhetoric from the US President Donald Trump has again came into front after the White House is heading with its decision to tax Indian goods at 50%, and threatening higher tariff to China.
Trump said Monday that the US will have to levy 200% tariff on China unless the Asian nation exports rare-earth magnets. It is dramatic shift since the two largest economies came to term earlier this year post tit-for-tat trade war.
Moreover, Trump has also threatened to levy tariff on countries which does not remove digital taxes and related regulation.
2.Global Markets Loss
Overnight losses on Wall Street and weakness in Asia-Pacific markets seeped into Indian markets. The main driver of the loss is the increasing uncertainty in the US as Trump fired Federal Reserve Governor Lisa Cook while Cook refused to step down from her post.
Japan's benchmark index 225 and South Korea's benchmark index KOSPI fell over 1% in Tuesday's session. Markets in China, Taiwan, and Australia were trading in loss.
3.Private Bank Stocks Weigh
ICICI Bank Ltd. and HDFC Bank Ltd. — highest weighted bank stocks in the Nifty 50— were trading in loss and emerged as two top draggers.
HDFC Bank Ltd.'s share price declined after the stock turned ex-bonus. With Tuesday's losses, the stock price has fallen for three sessions in a row.
4.Technical Factors
The NSE Nifty 50 continued to trade near support level of 24,800. "Below 24,850/81300, the chances of reaching 24,750-24,670/81000-80800 increase significantly," said Shrikant Chouhan, head, equity research, Kotak Securities
"We believe the intraday market pattern is directionless; hence, level-based trading would be an ideal strategy for day traders," Chouhan said.
Geojit Financial Services said that the Nifty 50 index has failed to close above 25,000 in Monday's session which already indicated that buyers are not very keen. Possibility of an upward movement decreased in case the Nifty 50 dips below 24,870.
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