Markets end lower on US trade policy concerns; broader markets outperform

Stock markets closed marginally lower for the third consecutive session on Tuesday, with the benchmark Sensex falling 203.22 points or 0.27 per cent to 75,735.96, while the Nifty 50 declined 19.75 points or 0.09 per cent to close at 22,913.15, amid concerns over potential US tariffs on Indian goods and hawkish signals from the Federal Reserve.

“Domestic equity indices experienced minor losses as rising concerns over potential U.S. tariffs on Indian goods led to capital outflows. Additionally, the proposed trade policy is expected to exert inflationary pressures, with the latest Fed Minutes indicating that an interest rate cut may be delayed,” said Vinod Nair, Head of Research, Geojit Financial Services.

The broader markets significantly outperformed the benchmark indices, with the Nifty Midcap 100 rising 1.26 per cent and the Nifty Smallcap 100 surging 1.43 per cent. The market breadth remained positive, with 2,616 stocks advancing against 1,347 declines on the BSE. Fifty-six stocks hit 52-week highs, while 155 touched 52-week lows.

Among sectoral indices, auto, metal, oil & gas, media, power, realty, and PSU banks logged gains of 1-2 per cent. However, the banking index underperformed, slipping 0.5 per cent amid profit booking, with HDFC Bank being the top Nifty loser.

The top gainers on the NSE included Shriram Finance (4.00 per cent), NTPC (3.26 per cent), Mahindra & Mahindra (2.72 per cent), Bharat Electronics (2.66 per cent), and Adani Ports (2.51 per cent). Major losers were HDFC Bank (-2.39 per cent), Maruti Suzuki (-2.10 per cent), Tech Mahindra (-1.71 per cent), Tata Consumer Products (-1.59 per cent), and HCL Technologies (-1.25 per cent).

• Read also: Top gainers & top losers today February 20, 2025: Shriram Finance, NTPC, M&M, BEL and Adani Ports lead gains

The Indian rupee strengthened against the US dollar, gaining 0.34 rupees to close at 86.68. “Rupee traded higher supported by weakness in crude prices and a dollar index trading below 107$. Improved risk sentiment also played a role, as DII inflows remained supportive, while FII selling slowed down,” noted Jateen Trivedi, VP Research Analyst at LKP Securities.

Gold prices continued their upward trajectory, with MCX gold gaining ₹550 to reach ₹86,500. “Gold traded positively supported by Comex gold holding strong at the $2,950 mark. A weaker dollar index has further aided gold’s upward momentum, while ongoing tariff adjustments from the U.S. continue to fuel uncertainty,” Trivedi added.

Technical analysts remained cautious about the market’s short-term trajectory. “Nifty has been trading within a broad range of 22,700–23,050. During this consolidation phase, dips toward 22,800–22,700 should be viewed as buying opportunities. A breakout above 23,050 would pave the way for further upside, towards the 20-day EMA placed around 23,200 levels,” according to Bajaj Broking’s market commentary.

The India VIX, which measures market volatility, declined 4.78 per cent to 14.68, indicating reduced fear among traders. Market participants are now awaiting the PMI data release on Thursday and RBI meeting minutes on Friday for further direction.

• Read also: Stock Market Highlights 20 February 2025: Sensex, Nifty close marginally lower for third day amid uncertainty on US tariff

“FIIs exiting Indian equities in droves over past few months have been making investors jittery, thus leading to risk averseness,” said Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, highlighting the ongoing concerns about foreign investor sentiment.