India’s benchmark indexes logged their biggest daily losses in a month on Tuesday, weighed down by profit-booking and concerns over foreign flows moving to China after its trade truce with the U.S.
The Nifty 50 fell 1.39% to 24,578.35 and the BSE Sensex lost 1.55% to 81,148.22. Both indexes had risen nearly 4% in the previous session after India reached and held a ceasefire with Pakistan following cross-border clashes. The broader small-caps and mid-caps closed 0.8% and 0.2% higher, respectively.
The gains in the broader markets were led by a steady rise in defence-linked companies and a post-results rally in key constituents. Meanwhile, the U.S. and China on Monday reached a deal to temporarily slash harsh reciprocal tariffs and cooperate to avoid rupturing the global economy.
“Foreign institutional money, which saw India as the place of safety over the last few weeks, could chase China now,” said Raghvendra Nath, managing director at Ladderup Wealth Management.
Any positive trigger that lifts the Nifty to record highs will have to come from earnings and that’s likely to take a few more months, he said.
Indian stocks log best day in 4 years on border truce; Pakistan shares surge
India saw bouts of foreign inflows in March, which strengthened in April and May, after aggressive sell-offs since late-September when the market hit record high levels.
IT stocks fell 2.4% on Monday. They soared 6.7% in the previous session, logging their best day in five years.
Heavyweight financials fell 1.1%, with HDFC Bank and Kotak Mahindra Bank shedding 1.8% and 1.2%, respectively.
In contrast, pharmaceutical stocks rose 1.2% after analysts said U.S. President Donald Trump’s executive order directing drugmakers to lower prices was not as bad as feared.
All eyes are now on India’s April inflation data, due after market hours. Consumer inflation likely eased to a near six-year low in April after a further moderation of food price rises, according to a Reuters poll of economists.
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