Markets Slide Amid Tariffs, Weak US Data and FII Selling
The Indian markets ended July on a dismal note, with the Sensex dropping over 800 points last week. The decline was attributed to a combination of factors, including foreign investor selling, US tariff uncertainty, and weak global cues. As a result, the Indian market ended the month down 3%, with investors bracing for more volatility in the coming days.
One of the primary concerns that weighed on the markets was the uncertainty surrounding US tariffs. The US has been implementing tariffs on various products, including Chinese goods, which has led to a trade war between the two nations. The uncertainty surrounding the tariffs has led to a decline in investor confidence, causing many to adopt a cautious approach.
Another factor that contributed to the market decline was the weak US job data. The US Labour Department’s chief economist, Jason Furman, was fired after releasing dismal jobs data, which raised concerns over politicised statistics. The firing has led to a loss of trust in the government’s data, making it challenging for investors to make informed decisions.
Foreign institutional investors (FIIs) also sold heavily in July, contributing to the market decline. FIIs have been net sellers in the Indian market for several months now, with their selling pressure exacerbating the market’s decline.
Despite the challenges posed by FIIs and weak global cues, domestic investors continued to buy into the market. The buying interest was largely driven by value investors, who saw the market correction as an opportunity to invest in quality stocks at discounted prices.
The decline in the market was also attributed to the weak global cues. The US market, which has been a major driver of global markets, has been struggling due to the trade war and weak economic data. The decline in the US market has led to a decline in investor confidence globally, causing many to adopt a cautious approach.
The Indian market’s decline was also influenced by the weak rupee. The rupee has been declining steadily over the past few months, which has made imports more expensive and has led to a decline in consumer spending. The weak rupee has also led to a decline in investor confidence, causing many to adopt a cautious approach.
Despite the challenges posed by FIIs, weak global cues, and the weak rupee, there are several reasons to be optimistic about the Indian market. The country’s economy is expected to grow at a rate of 7%, driven by a strong domestic demand and a pickup in exports.
The Indian government has also taken several steps to boost the economy, including reducing corporate taxes and increasing spending on infrastructure. These measures are expected to boost economic growth and improve investor confidence.
The Indian market’s decline was also attributed to the weak earnings season. Many companies have reported weak earnings due to the challenging global environment, which has led to a decline in investor confidence.
Despite the challenges, there are several stocks that have the potential to deliver strong returns. These stocks are largely driven by domestic demand and are less susceptible to global cues.
In conclusion, the Indian market’s decline in July was attributed to a combination of factors, including foreign investor selling, US tariff uncertainty, and weak global cues. Despite the challenges, domestic investors continued to buy into the market, driven by value investors who saw the market correction as an opportunity to invest in quality stocks at discounted prices. The Indian market’s decline was also influenced by the weak rupee, but there are several reasons to be optimistic about the market’s prospects.
As domestic investors continue to buy, the market is bracing for more global volatility. The uncertainty surrounding US tariffs and the weak global cues is expected to continue, making it challenging for investors to make informed decisions. However, the Indian market’s strong fundamentals and the government’s efforts to boost the economy are expected to drive growth in the coming days.
Source:
https://www.thecore.in/podcasts/markets-continue-to-reel-from-fii-selling-and-weak-cues-840594
