Key gauges extend losing streak for 3rd consecutive session

Indian equity benchmarks extended their losing streak for the third consecutive session and ended lower by over a percent on Tuesday, dragged down by broad-based selling amid reports of increasing COVID-19 cases in Southeast Asian countries like Singapore and Hong Kong. Investors also monitored ongoing India-U.S. trade discussions, adding further market pressure.

Some of the important factors in today’s trade:

Rupee falls against US Dollar: Indian rupee depreciated against the American currency, tracking a muted trend in domestic equities and foreign fund outflows. The recent surge in the US 10-year yield reflects mounting concerns over fiscal and monetary policies, driving borrowing costs higher and this has pushed the Dollar Index lower.

FPIs turn net sellers: The provisional data from the National Stock Exchange showed foreign portfolio investors (FPIs) turned net sellers on Monday, offloading equities worth Rs 526 crore. The FPIs bought Rs 5,746.5 crore on Friday. So far in May, the overseas investors have net bought shares worth Rs 26,103 crore.

India makes progress in making manufacturing sector more attractive to global investors: S&P Global study stated that India has made progress in making its manufacturing sector more attractive to global investors, and ongoing changes in international trade policy would benefit India in the long run.

India, US discuss expediting conclusion of first phase of trade pact: Commerce and Industry Minister Piyush Goyal held discussions with US Commerce Secretary Howard Lutnick in Washington to expedite negotiations on the first phase of the proposed bilateral trade agreement between the two countries.

Global front: European markets were trading higher as investors watched the latest developments on the trade front and reacted to widely expected rate cuts in China to stimulate consumption and loan growth. Asian markets settled mostly higher on Tuesday as investors stayed focused on the outcome of U.S. trade negotiations with India and Japan, following a 90-day pause on reciprocal tariffs between the U.S. and China.

Finally, the BSE Sensex fell 872.98 points or 1.06% to 81,186.44 and the CNX Nifty was down by 261.55 points or 1.05% to 24,683.90.    

The BSE Sensex touched high and low of 82,250.42 and 81,153.70 respectively. There were 3 stocks advancing against 27 stocks declining on the index. 

The broader indices ended in red; the BSE Mid cap index fell 1.65%, while Small cap index was down by 0.96%.

The top losing sectoral indices on the BSE were Auto down by 2.13%, Consumer Discretionary down by 1.81%, Utilities down by 1.64%, Power down by 1.43% and Industrials down by 1.36%, while there were no gaining sectoral indices on the BSE. 

The top gainers on the Sensex were Tata Steel up by 0.73%, Infosys up by 0.08% and ITC up by 0.07%. On the flip side, Eternal down by 4.10%, Maruti Suzuki down by 2.76%, Mahindra & Mahindra down by 2.13%, Ultratech Cement down by 2.04% and Power Grid Corporation down by 2.01% were the top losers.

Meanwhile, Commerce and Industry Minister Piyush Goyal held discussions with US Commerce Secretary Howard Lutnick in Washington to expedite negotiations on the first phase of the proposed bilateral trade agreement between the two countries. Goyal is in Washington for a ministerial-level meeting to review the progress of negotiations of the trade pact. Goyal was in Washington in March also for the trade talks. 

The minister-level meeting is followed by the deliberations between chief negotiators of the two countries, which will continue until May 22, 2025. The meetings come against the backdrop of both countries exploring the possibility of an interim trade arrangement in goods to secure ‘early mutual wins’ ahead of finalising the first phase of the trade agreement by fall (September-October) this year. The main issues that will figure in the negotiations include market access, rules of origin, and non-tariff barriers.

Officials from New Delhi and Washington aim to take advantage of the 90-day tariff pause window to advance the talks. The US has suspended the additional 26 per cent tariffs on India till July 9. It was announced on April 2 to bridge the widening trade deficit. However, the 10 per cent baseline tariff imposed on the countries will continue to remain in place.

To boost bilateral trade, India is seeking duty concessions for labour-intensive sectors like textiles, gems and jewellery, leather goods, garments, plastics, chemicals, shrimp, oil seeds, chemicals, grapes, and bananas in the proposed pact with America. On the other hand, the US wants duty concessions in sectors like certain industrial goods, automobiles (electric vehicles in particular), wines, petrochemical products, dairy, agriculture items such as apples, and tree nuts. The terms of reference (ToRs) for the BTA have been finalised by India and the US, which include around 19 chapters covering issues like tariffs, goods, services, rules of origin, non-tariff barriers, and customs facilitation.

The CNX Nifty traded in a range of 25,010.35 and 24,669.70. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Coal India up by 1.55%, Tata Steel up by 1.28%, Hindalco up by 1.16%, ONGC up by 1.00% and Dr. Reddy's Lab up by 0.49%. On the flip side, Eternal down by 4.21%, Hero MotoCorp down by 3.16%, Bajaj Auto down by 2.84%, Maruti Suzuki down by 2.69% and Shriram Finance down by 2.67% and were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 41.98 points or 0.48% to 8,741.29, France’s CAC rose 32.74 points or 0.42% to 7,916.37 and Germany’s DAX gained 125.8 points or 0.53% to 24,060.78.

Asian markets settled mostly higher on Tuesday amid investors were focusing on the outcome of US trade negotiations with India and Japan, following a 90-day pause on reciprocal tariffs between the US and China. Chinese shares gained after the People's Bank of China cut benchmark lending rates for the first time since October. PBoC slashed its one-year loan prime rate to 3% from 3.1%, while the five-year LPR was lowered by 10 basis points to 3.5%. Hong Kong shares rose as technology shares like Alibaba and Baidu surged on China's growth push. Japanese shares ended almost unchanged, giving up early gains supported by a weaker yen. However, Investors were in caution about rising debt and tariff uncertainty following Moody's downgrade of the US credit rating.