markets await update on reciprocal tariffs

* The elephant in the room continues to be sustained FII selling 

* Decline in inflation trajectory justifies RBI’s rate cut, and creates a favourable condition for another 25 bps rate cut in April 

* Sensex, Nifty pare early gains to close lower for 7th straight session  

FPJ News Service New Delhi

Markets continued to remain unpredictable as investors are eagerly waiting for an update on the Trump proposed reciprocal tariffs. “Trump’s ‘an eye for an eye, a tariff for a tariff’ strategy is unworkable. The elephant in the room, however, continues to be sustained FII selling caused by their unconvincing and aggressive approach.

Decline in inflation trajectory justifies RBI’s recent rate cut, and creates a favourable condition for another 25 bps rate cut in April,” market men said. Last month, PM Modi and President Trump had vowed to work towards a ‘trusted’ partnership with a focus on boosting India-US cooperation in areas of trade, energy and defence. Pivotal IT and banking shares lost on foreign fund outflows. 

 The 30-share BSE Sensex dipped 32.11 points to close at 76,138.97. The index stayed in the positive zone for the most part of the session. The benchmark gyrated 751.1 points between the day’s high of 76,764.53 and low of 76,013.43.

According to Dr. V K Vijayakumar, chief investment strategist, Geojit Financial Services, when the market is in oversold territory, some triggers can ignite a rally. The Indian market is in highly oversold territory and, therefore, is likely to rally on positive news expected from the Trump-Modi talks today. Some agreement is likely between the US and India on reciprocal tariffs. A positive domestic trigger is the better-than-expected decline in CPI inflation in January to 4.31% from 5.22 % in December 2024. 

“The decline in inflation trajectory justifies the MPC’s rate cut this month and creates a favourable condition for another 25 bp rate cut in April. This augurs well for the stock market in general and rate-sensitives in particular. From the market perspective, the elephant in the room continues to be the sustained FII selling which is showing no signs of abating.”

Vinod Nair, Head of Research at Geojit said, “Despite initial market optimism driven by easing domestic inflation data, the rally lost momentum amid uncertain global cues and subdued corporate earnings. Furthermore, a surge in Chinese technology stocks, fuelled by heightened interest in artificial intelligence, redirected FIIs in pursuit of more attractive returns. Market participants are now closely monitoring the outcome of the Trump-Modi discussions for any trade and tariff concessions for a potential pullback rally."

The NSE Nifty slipped 13.85 points to 23,031.40. 

From the 30-share blue-chip pack, Adani Ports, Infosys, Tata Consultancy Services, State Bank of India, Nestle and Titan were among losers. Sun Pharma, Tata Steel, Bajaj Finserv, Bajaj Finance, Kotak Mahindra Bank and Zomato were the biggest gainers. FIIs had offloaded equities worth Rs 4,969.30 crore on Wednesday.