Indian equity markets witnessed sharp selling pressure for the second consecutive session on Tuesday as global cues turned weak and investor sentiment remained cautious ahead of the US Federal Reserve’s policy decision. Additional worries surfaced after the US hinted at possible tariff action on India’s rice exports, further dampening market mood.
Benchmarks Decline in Early Trade
At 9:50 am, both benchmark indices extended Monday’s losses:
BSE Sensex: Fell 633.90 points (0.74%) to 84,468.79
NSE Nifty: Dropped 211.25 points (0.81%) to 25,749.30
All 16 major sectoral indices were trading in the red.
Market breadth also stayed weak:
Advances: ~1400
Declines: ~2104
Unchanged: 151
Top Losers & Gainers
Several heavyweight stocks pressured the benchmarks:
Major Laggards (Down up to 4%)
Asian Paints
Infosys
Jio Financial Services
Top Gainers (Up to 1%)
Titan Company
ETERNAL
Weakness across IT, consumer stocks, and financials contributed to overall declines.
Also Read: Despite Tariff Tensions, India Remains Key Growth Market for Google, Says Country Head Preeti Lobana
Key Reasons Behind the Market Fall
Several global and domestic factors drove the market slide. Here is a breakdown of the triggers:
1. Fed Outcome Jitters
Investors remained cautious ahead of the Federal Reserve’s crucial two-day meeting starting Tuesday.
Markets largely expect a 25 bps rate cut on Wednesday.
However, the bigger concern is the pace of rate easing in 2026.
Persistent US inflation and expectations of a resilient economy added uncertainty.
Devarsh Vakil, Head of Prime Research at HDFC Securities, said the rate cut is “largely priced in,” adding that markets will focus on the Fed’s statement, projections, and Jerome Powell’s press conference.
Investors expect 2–4 more cuts in 2026, unless economic conditions shift significantly.
2.US Tariff Warning on India’s Rice Exports
Sentiment took a hit after US President Donald Trump stated that India should not be “dumping” rice in the American market and indicated tariff action.
Key details from the report:
US is the fourth-largest market for Indian basmati rice.
India exported 270,000 metric tonnes to the US.
Indian export prices remained unchanged despite existing tariffs.
US importers reportedly passed costs to consumers.
Rice exporter stocks reacted sharply:
KRBL: –2.9%
LT Foods: –8%
GRM Overseas: –4.8%
Mishtann Foods: –2.1%
3. Rupee Weakness Adds to Pressure
The Indian rupee weakened 10 paise to 90.15 per USD in early trade.
Weakness was driven by demand from corporates, importers, and FPIs.
The currency opened lower than its previous close.
Traders avoided fresh bets ahead of the Fed verdict.
Prashanth Tapse, Senior VP at Mehta Equities, said sentiment remains fragile due to
persistent FII selling,
rupee slipping toward 90/USD, and
soft global cues.
4. Persistent FII Selling
Foreign institutional investors (FIIs) continued to reduce their India exposure.
FII outflows on Monday: ₹655.59 crore
This marked the 8th consecutive session of selling.
Continuous FII outflows typically intensify market weakness during high global uncertainty.
5. Weak Global Cues Pressure Sentiment
Asian markets mirrored the cautious global mood:
Hang Seng, KOSPI, and Shanghai Composite all traded lower.
US markets also ended in the red on Monday ahead of the Fed meeting.
Weakness across global equities signaled widespread risk-off sentiment.
6 . Broader Markets Extend Decline
Midcap and smallcap indices continued to fall:
Fell up to 1% in today’s session.
Monday saw a sharp correction:
Nifty Midcap 100: –1.83%
Nifty Smallcap 100: –2.61% (biggest single-day fall since April 7, 2025)
The small-cap index hit a six-month low in the previous session.
Selling Intensifies in IT Stocks
IT shares were among the hardest hit:
All 10 Nifty IT index components traded in the red.
Coforge and Persistent Systems led the declines.
Weak US outlook and pre-Fed jitters accelerated selling in tech stocks.
Technical View
According to Anand James, Chief Market Strategist at Geojit Financial Services:
Nifty may show early weakness.
If 25,842 holds, the index may attempt a recovery.
A move above 26,000 could strengthen upward momentum.
A break below 25,842 may extend losses toward 25,650.
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