On Wednesday, March 26, 2025, India's benchmark equity indices, the Sensex and Nifty 50, experienced a downturn as investors engaged in profit booking after a seven-day winning streak. The Nifty 50 ended the session down by 0.77%, closing at 23,486 points, while the BSE Sensex 30 index fell 0.93% to settle at 77,288 points. This decline followed a significant recovery over the previous week, where both indices had gained over 5.5%, buoyed by foreign capital inflows and optimism regarding improving domestic macroeconomic conditions.
The recent profit booking was largely attributed to uncertainties surrounding the upcoming U.S. tariffs set to be announced by the Trump administration on April 2. Investors are particularly concerned about which countries and sectors may be exempt from these tariffs, leading to a hesitancy in making new investments. As Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted, "The ongoing negotiations between India and the U.S. could lead to positive developments, and there is a possibility that Trump may ease reciprocal tariffs, which would be a favorable outcome for the Indian stock market."
Sector-wise, all 13 major sectoral indices faced selling pressure, with the Nifty Media index being the worst performer, losing 2.40% of its value. Other sectors such as Oil & Gas, Realty, and Public Sector Undertakings also saw notable declines. The sharp drop in shares of major companies like HDFC Bank, Infosys, Reliance Industries, Axis Bank, and NTPC contributed significantly to the Nifty's decline, accounting for 106 points, or 56% of the total drop.
Among the top performers on the Nifty 50, IndusInd Bank Ltd. managed to rise by 2.86%, closing at 655.30 points, followed by Trent Ltd, which added 2.64% to end at 5,321.95 points. HCL Technologies Ltd also saw a modest gain of 0.52%, ending at 1,633.40 points. In contrast, NTPC Ltd. was among the worst performers, falling 3.35% to close at 354.65 points, while Tech Mahindra Ltd and Cipla Ltd also recorded declines of 2.69% and 2.32%, respectively.
The broader market also faced pressure, with the Nifty Midcap 100 index ending 0.62% lower at 51,646 points, marking a cumulative loss of 1.6% over two days. Similarly, the Nifty Smallcap 100 index dropped 1.17%, closing at 15,920 points, resulting in a 4.2% decline over the same period. Of the 50 constituents in the Nifty 50 index, 41 stocks ended the day with losses.
Despite the overall negative sentiment, foreign portfolio investors (FPIs) continued to buy Indian stocks, with inflows of ₹19,000 crore in the cash segment from March 20 to March 25. This influx of foreign capital has been a key driver behind the recent rallies in the Indian stock market. However, analysts caution that the potential for a shift in capital towards cheaper Chinese stocks could pose a risk to Indian equities. G. Chokkalingam, founder and head of research at Equinomics Research, remarked, "I don’t see the likelihood of another significant round of punishment by FPIs. In terms of the magnitude of the impact of the U.S. trade war, China would be the most affected economy."
Looking ahead, experts believe that while the Q4 earnings may remain soft, improvements are expected in Q1 FY26 as the economy shows signs of recovery. Vijayakumar emphasized, "Inflation has fallen below 4%, increasing the likelihood of an RBI rate cut in April. The fiscal stimulus announced in Budget 2025, including over ₹1 lakh crore in tax relief and monetary support, is expected to sustain economic growth."
In commodities trading, gold futures for June delivery were up 0.05% to $3,055.96 per troy ounce. Crude oil prices also saw a slight increase, with May delivery rising 0.84% to $69.58 per barrel, while the June Brent oil contract was up 0.80% to $72.97 per barrel. The Indian rupee traded at ₹85.47 against the U.S. dollar, down 0.13%, while the euro was up 0.09% to ₹92.48.
As the week progresses, all eyes will be on the U.S.-India trade negotiations, which are expected to conclude on Saturday. Investor sentiment is likely to remain cautious until clarity emerges regarding the U.S. tariff policies and their potential impact on the Indian economy.
In summary, the Indian stock market is navigating a complex landscape of profit booking and external economic pressures, with investors keenly watching developments that could influence future market performance. With a backdrop of recent gains, the market's current trajectory highlights the delicate balance between optimism and caution in these uncertain times.
