Indian Stock Markets Slide Amid Trade Deficit Surge
On Tuesday, Indian stock markets experienced a downturn due to disappointing export data and a notable increase in the trade deficit. The Nifty 50 index started at 24,584.80 points, showing a decrease of 83.45 points or 0.34%. Likewise, the BSE Sensex declined by 236 points, opening at 81,511 points.
Specialists emphasized the expanding trade imbalance as the primary market event, underlining the increasing worry regarding the potential decline of the Indian rupee. The trade deficit hit an unprecedented high of USD 37.8 billion in November, rising from USD 27.1 billion in October, mainly due to poor export performance.
Ajay Bagga, an expert in banking and markets, observed that the increase in the trade deficit has led to expectations that the Reserve Bank of India (RBI) might intervene, possibly by cutting rates.
Bagga also criticized the RBI's decision to use over USD 50 billion of foreign exchange reserves to stabilize the rupee, suggesting that allowing the rupee to depreciate could have been a more effective approach.
He further highlighted the necessity for injecting liquidity and reducing rates to enhance export competitiveness and reduce imports.
In the sectoral indices, the market displayed a mixed trend. Nifty FMCG, Nifty Media, and Nifty Pharma saw gains, whereas Nifty Bank, Nifty Auto, and Nifty IT experienced losses.
Within the Nifty 50 shares, 16 stocks rose while 34 fell during early trading. The leading gainers were Cipla, Tata Motors, Tech Mahindra, Adani Ports, and BEL, whereas the primary losers included Shriram Finance, Grasim, Reliance, Eicher Motors, and Britannia.
Akshay Chinchalkar, the Head of Research at Axis Securities, stated that market resistance is between 24,726 and 24,800, while support is found between 24,554 and 24,580.
He also noted the possibility of increased volatility due to lower trading volumes during this time.
In other parts of Asia, market movements were varied. Japan's Nikkei 225 increased by 0.15%, and Taiwan's Weighted index went up by 0.34%.
On the contrary, markets in Hong Kong, South Korea, and Jakarta experienced declines of approximately 0.39%.