Indian Markets Open Weak Amidst FPI Selling and Trade Deal Uncertainty

Indian stock markets began Tuesday's trading session on a negative note. This was influenced by ongoing selling from foreign portfolio investors (FPIs) and concerns surrounding a potential delay in the India-US trade agreement, which could lead to a 15% tariff. The Nifty 50 index opened lower, as did the BSE Sensex.

Market analysts observed that Indian equities are currently in an oversold position. While a short-term technical rebound is possible, a sustained recovery is unlikely unless FPI flows turn positive.

According to a banking and market expert, the Indian markets are experiencing consistent FPI selling. The primary market, however, is seeing strong interest, while promoter selling has been significant year-to-date. The expert noted the absence of any immediate positive catalysts, particularly with the uncertain India-US trade deal. Indian stocks are heavily oversold, and the monthly expiry of July is approaching with weak sentiment and underwhelming earnings. A technical bounce is expected from these oversold levels, but a catalyst is currently lacking.

Globally, markets largely disregarded the US-EU trade deal and focused on a week filled with economic data releases, including earnings reports, employment figures, and central bank decisions. Experts noted a sense of "Trump Tariff ennui" in the markets, stemming from repeated trade threats, temporary reprieves, and eventual deals often settling around the 15-20% tariff range.

Asian markets displayed caution ahead of the US-China trade talks in Stockholm. The China tariffs deadline might be extended by 90 days. Markets are also awaiting deals with China, Canada, and Mexico, while closely monitoring economic indicators and central bank policy guidance.

Within the broader NSE indices, the Nifty 100 remained flat. The Nifty Midcap 100 index saw a slight increase, while the Nifty Smallcap index experienced a small decrease. Sectoral performance varied, with Nifty IT continuing its decline. Other sectors like Auto, FMCG, Media, Metal, Pharma, PSU Bank, and Realty showed gains.

A research head at Axis Securities noted that the Nifty closed lower the previous day, ending below a key level. Technically, the ongoing decline targets a support area, with a significant test for bulls anticipated if prices reach a certain level.

Several major Indian companies are scheduled to release their Q1 results.

In other Asian markets, Japan's Nikkei 225 index declined, as did Singapore's Straits Times and Hong Kong's Hang Seng index. Taiwan's weighted index also dropped, while South Korea's KOSPI index showed a gain.