Indian stocks settle with marginal gains; uncertainty looms over US trade deadline

Markets Close Flat Amid Global Uncertainty

Indian benchmark indices ended Wednesday’s session with marginal gains, weighed down by global headwinds and investor caution ahead of a crucial US trade deadline. The Sensex rose 89.47 points or 0.12% to close at 80,256.23, while the Nifty 50 advanced 27.60 points or 0.11% to finish at 24,416.75. Despite a steady performance in FMCG and IT stocks, the broader mood remained cautious as global cues overshadowed domestic strength.

Sectoral Snapshot: FMCG and IT Lead; Metals, Banks Lag

Sector-wise, the Nifty FMCG and Nifty IT indices were among the top performers, gaining 0.7% and 0.5% respectively, driven by safe-haven buying and resilience in export-oriented firms.

“Investors are currently gravitating toward defensive sectors like FMCG and IT amid global uncertainty. These pockets offer earnings stability even during volatile times,” said Sandeep Bhatia, Head of Equities at Macquarie India.

On the flip side, Nifty Metal and Nifty Bank were under pressure, shedding 0.6% and 0.4% respectively, as risk appetite weakened globally. Heavyweights like Hindalco and Tata Steel faced selling pressure amid signs of cooling demand in China and the looming US trade policy revision.

US Trade Deadline Weighs on Sentiment

Investors globally are watching closely as the US approaches a key trade policy deadline on August 1. Washington is expected to either renew or revise existing trade tariffs with several trading partners, including China and the European Union. The uncertainty has led to volatility in global markets, spilling over to emerging economies like India.

“The lack of clarity on whether the US will hike tariffs or strike a conciliatory tone is creating a wait-and-watch sentiment among global investors. India, being part of the global value chain, remains indirectly affected,” said Ruchir Sharma, Global Strategist at Morgan Stanley.

Broader Markets Mixed; Volatility Index Rises

The broader market displayed mixed performance. The BSE MidCap index ended flat, while the SmallCap index gained 0.3%. The India VIX, a measure of market volatility, rose by 2.1% to 12.87, indicating a slight uptick in investor nervousness.

Notable midcap gainers included Coforge, which rose nearly 3.2% on positive quarterly guidance, and Trent, which extended its rally with a 2.8% gain post-earnings.

On the downside, PSU stocks and select private lenders saw weakness. SBI and Axis Bank declined over 1% as investors booked profits ahead of the upcoming RBI monetary policy.

Rupee, Bond Yields Reflect Global Nervousness

The Indian rupee closed at 83.14 against the US dollar, marginally weaker from Tuesday’s 83.08 close. Rising US bond yields and a strong greenback contributed to the pressure on emerging market currencies. Meanwhile, the 10-year Indian benchmark bond yield remained steady at 7.14%, supported by domestic institutional buying.

“Any aggressive trade action from the US could strengthen the dollar further, prompting capital outflows from emerging markets,” said Meenakshi Iyer, Chief Economist at Kotak Institutional Equities.

FIIs Continue Cautious Stance

Foreign institutional investors (FIIs) remained net sellers for the third consecutive session, offloading equities worth ₹438 crore, according to provisional exchange data. Domestic institutional investors (DIIs), however, offset the outflows with net purchases of ₹517 crore.

“FIIs are recalibrating their global portfolios amid geopolitical risk and policy uncertainty. However, strong DII inflows are helping stabilize Indian markets in the near term,” noted Ankit Agarwal, Fund Manager at Motilal Oswal AMC.

Global Markets Stay Subdued

Asian peers mirrored the cautious tone. Japan’s Nikkei closed flat, while Hong Kong’s Hang Seng dipped 0.6% on weakness in tech shares. European markets opened mixed, with the Stoxx 600 and FTSE 100 showing early signs of volatility ahead of US data releases and trade policy updates.

Wall Street futures also indicated a soft open, with the Dow Jones and Nasdaq Composite expected to trade lower as US policymakers weigh options on trade tariffs and inflation outlook.

Investor Outlook: Focus Shifts to RBI Policy, US Trade Clarity

Looking ahead, investors are likely to remain on edge until clarity emerges from the US on trade actions and inflation control measures. Domestically, the Reserve Bank of India’s monetary policy decision next week will be closely watched, especially amid rising food prices and monsoon irregularities.

“Market direction in the coming days will hinge on external cues and RBI commentary. For now, it’s a phase of consolidation with a defensive bias,” said Richa Agarwal, Equity Analyst at Edelweiss Securities.

Analysts advise investors to maintain a balanced approach with exposure to large-cap defensives and quality midcaps while avoiding excessive leverage or aggressive bets during this uncertain phase.