Indian equity benchmarks experienced a hesitant and choppy start to trading on Tuesday morning, April 16, momentarily pausing a robust rally that had propelled the markets higher for four consecutive sessions.
While underlying domestic factors and institutional flows remained supportive, negative cues from overseas markets, particularly concerns surrounding US political pressure on the Federal Reserve, appeared to prompt caution among investors.
Early hesitation after strong run
Shortly after the opening bell, the benchmark indices relinquished some of the previous day’s strong gains.
At 9:21 AM IST, the BSE Sensex was trading modestly lower by 89 points, or 0.11%, at 79,319.57.
Similarly, the NSE Nifty50 index dipped 19 points, or 0.077%, hovering near the 24,100 mark at 24,107.05.
This consolidation followed a period of sustained buying momentum, driven by positive sentiment around major stocks and consistent foreign institutional investment, with market watchers anticipating the trend to continue amid the ongoing Q4 earnings season.
Global headwinds: Trump vs. Powell fears linger
The primary driver behind Tuesday’s subdued opening appeared to be the ripple effect from overnight market movements in the US.
Wall Street saw declines on Monday after President Donald Trump escalated his criticism of Federal Reserve Chairman Jerome Powell, raising concerns about the central bank’s operational independence at a time when investors are already navigating unpredictable trade policies.
This nervousness extended into Asian trading early Tuesday.
According to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, these are unusual times where the typical high correlation between the US “mother market” and others might break down.
“The US market was rattled yesterday on news of potential Trump-Powell tensions impacting the independence of the Fed. Markets abhor this,” he noted.
Dr. Vijayakumar highlighted Powell’s stance of relying on incoming data, which currently points towards challenges for the US economy, and his dismissal of a potential ‘Fed Put’ (market bailout) in a recent interview.
“Therefore, disagreement between the president and the Fed chief is likely to linger resulting in some action from the mercurial president which can lead to legal battles,” Dr. Vijayakumar elaborated.
He suggested this period of uncertainty could lead to emerging markets like India “decoupling” from the US market.
“Investors can focus on fundamentally sound stocks. Bank Nifty is likely to remain resilient,” he advised.
Cross-asset signals: gold gains, oil recovers
The broader market uncertainty was reflected in other asset classes.
Gold continued its record-setting run into Tuesday, its safe-haven appeal burnished by the concerns over US political interference with the Fed and potential economic slowing due to trade disputes.
Meanwhile, oil prices saw a modest uptick in early Tuesday trading, potentially driven by traders covering short positions after recent losses, though concerns about the impact of tariffs and US monetary policy on fuel demand persisted.
Institutional flows remain supportive
Despite the choppy start, underlying institutional support for the Indian market remained evident.
Foreign Portfolio Investors (FPIs) continued their buying streak, registering as net buyers to the tune of Rs 1,970 crore on Monday.
Domestic Institutional Investors (DIIs) also contributed positively, purchasing shares worth Rs 246 crore.
Furthermore, a significant indicator of improving foreign sentiment was the reduction in FIIs’ net short positions, which decreased from Rs 83,273 crore on Thursday to Rs 77,270 crore on Monday, suggesting diminished bearish bets against the market.
While Tuesday’s initial trade suggested a pause for breath, the combination of strong domestic factors and continued FII interest provides a potential cushion against the prevailing global uncertainties.
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