Indian stock market benchmarks, the Sensex and Nifty, opened to a muted start on Wednesday, as fresh tariff threats from US President Donald Trump and a cautious tone from the US Federal Reserve have soured investor sentiment across Asia.
After snapping a four-day winning streak in the previous session, Dalal Street is bracing for another day of cautious trading amidst these challenging global headwinds.
Against this backdrop, Indian benchmark indices are likely to feel the pressure. The trends on Gift Nifty indicated a tepid start, trading around the 25,186 level—lower by 0.3 percent or 80 points. This suggests the Nifty50 could open with a slight dip, continuing the negative momentum from Tuesday’s session.
On Tuesday, the domestic equity market’s recent rally came to a halt. The Sensex had slipped 239.31 points, or 0.29 percent, to close at 81,312.32, while the Nifty 50 fell 73.75 points, or 0.30 percent, to settle at 24,752.45.
This decline was attributed to profit booking and investors turning cautious ahead of the Q1 earnings season, which kicks off on Thursday. The rising confusion over a potential US-India trade deal has also added to the pressure in recent sessions, dragging down investor confidence.
Global jitters weigh on Dalal Street
The primary concern for investors this morning is a renewed wave of trade uncertainty emanating from Washington. President Trump has threatened new tariffs on pharmaceuticals and semiconductors, adding to the anxiety that has plagued global markets.
This follows a period where Asian stocks had been mixed, trying to find direction.
Further dampening the mood were comments from Federal Reserve Bank of Dallas President Lorie Logan. She suggested that US interest rates may need to stay steady for a bit longer to fully tame inflation, especially as new data indicates that companies are beginning to pass on tariff-related costs to consumers.
Her remarks led traders to pare back their bets on multiple Fed rate cuts this year, with the probability of a move in September now seen as only slightly better than a coin toss.
The reaction across Asia was a clear reflection of this apprehension. Japan’s Nikkei was flat at the open, while South Korea’s Kospi lost 0.5% and Australia’s S&P/ASX 200 declined by 0.82%. US stock futures also pointed lower, signaling that the risk-off sentiment is widespread.
A lone bright spot: Asian chip stocks rally
Despite the broader market gloom, a notable counter-trend emerged in the technology sector, which could offer some pockets of resilience for related Indian stocks.
Chip stocks across Asia rose after artificial intelligence darling Nvidia announced it would resume sales of its H20 AI general processing units to China “soon,” following the U.S.’s reversal of certain export controls.
This news sent a positive ripple through the region’s tech supply chain. TSMC, a key Nvidia manufacturer, saw its shares rise by 0.9%.
Taiwan’s Hon Hai Precision Industry (Foxconn) also inched 0.31% higher, and several Japanese chip stocks, including Advantest and Softbank, gained ground.
This AI-driven optimism in the chip sector may provide a slight buffer against the overwhelmingly cautious sentiment dominating the broader market today.
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