The Indian benchmark index Nifty 50 saw a mild correction on Tuesday, closing at 24,650, down by 73 points, reflecting investor caution amid global trade uncertainties and mixed Q1 earnings results. This marked a pause after a recent two-day rally, with the broader market sentiment swayed by fresh comments from former US President Donald Trump about imposing new tariffs if re-elected.
The Nifty 50, which had shown resilience last week, was dragged lower primarily by heavyweight stocks such as Reliance Industries and top banking players like HDFC Bank and ICICI Bank. In contrast, midcaps and smallcaps outperformed, highlighting selective bullishness in the market.
Trump Tariff Threat Rattles Sentiments
Global equities turned jittery after Trump announced plans to impose a 10% universal import tariff, reigniting fears of a trade war. This geopolitical rhetoric weighed heavily on investor sentiment globally, including in India, where the Nifty 50 faced downward pressure despite localized earnings optimism in certain sectors.
Asian and European markets witnessed similar corrections, setting the stage for a cautious domestic session. The IT and FMCG sectors led the losses, while public sector banks, real estate, and auto stocks offered some support to the otherwise tepid performance.
Sectoral Impact on Nifty 50 Components
The Nifty IT index slipped over 1% on the back of selling in stocks like Infosys and TCS, both of which are significant contributors to the Nifty 50. FMCG and pharma sectors also underperformed, reflecting concerns about rising input costs and weak consumer demand.
Conversely, Titan emerged as the top gainer on the Nifty 50, rising over 2% ahead of the festive season. Auto stocks like Maruti and M&M showed gains, anticipating festive pre-buying trends. IndusInd Bank surged intraday by nearly 6% following the appointment of Rajiv Anand as its new CEO, although it couldn’t lift the broader banking index out of the red.
Broader Market Outlook Remains Constructive
Despite the muted performance of the Nifty 50, the broader markets showed relative strength. The Nifty Midcap 100 rose 0.4%, and the Nifty Smallcap 100 added nearly 1%, indicating sustained retail interest and stock-specific accumulation.
This divergence between large-cap and midcap sentiment highlights the potential for alpha generation beyond the Nifty 50 index, particularly in sectors like defense, renewables, and specialty chemicals, where earnings were upbeat.
Earnings in Focus
Corporate earnings remained a mixed bag. Aurobindo Pharma declined on weak quarterly results, while Siemens Energy and MTAR Technologies reported strong earnings, with the latter surging 11% intraday. Berger Paints also witnessed subdued performance, with a YoY decline in profit despite marginal revenue growth.
With results from key players like Solar Industries and Adani Ports still due later this week, traders are expected to remain stock-specific rather than index-driven.
Technical Levels to Watch
Analysts suggest that Nifty 50 may find strong support at 24,500, while resistance remains near 24,800. A break below the support zone could invite further profit booking, while a breach above resistance could revive bullish momentum.
With global headwinds and ongoing earnings season, traders are advised to maintain a cautious stance and adopt a buy-on-dips strategy in quality stocks within the Nifty 50 basket.
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