Author: Eqwires

Indian equity benchmarks came under heavy selling pressure on Thursday, June 12, halting a six-day winning streak as investors opted to book profits amid weak global cues and rising geopolitical tensions. Both the SENSEX and NIFTY50 witnessed sharp declines, led by a sell-off in index heavyweights.

By 2:29 PM, the SENSEX was down 909 points at 81,608, while the NIFTY50 had shed 281 points, trading just above the 24,850 mark at 24,862.

What’s Behind Today’s Market Slide?

1. Weak Global Cues and Geopolitical Tensions

Global markets turned risk-averse after reports surfaced of rising tensions between Iran and Israel. The Washington Post reported that the U.S. is on high alert amid concerns that Israel may unilaterally strike Iran’s nuclear facilities. In response, The New York Times noted that Iranian military and government officials have already begun discussing potential countermeasures.

This uncertainty rippled through global equity markets:

• Hong Kong’s Hang Seng fell 1.42%
• Japan’s Nikkei declined 0.68%
• Germany’s DAX dropped 1.43%
• UK’s FTSE 100 slipped 0.1%
• France’s CAC 40 shed 0.82%

U.S. stock futures also hinted at a weaker open, with Dow Futures down 0.5% or 214 points.

2. Crude Oil Spike Hits Sentiment

Escalating tensions in the Middle East sent crude oil prices soaring — bad news for India, which imports a majority of its oil. Rising oil prices are inflationary and could pressure India’s trade balance and fiscal health, souring investor sentiment.

3. Heavyweights Lead the Decline

Major blue-chip stocks dragged the benchmarks lower. Notable names like Larsen & Toubro, HDFC Bank, Reliance Industries, Infosys, ICICI Bank, and Mahindra & Mahindra were among the biggest contributors to the market’s fall, collectively erasing nearly 400 points from the SENSEX.

4. Sector-Wide Selloff

The pain was broad-based:

• NIFTY Realty plunged 2%
• Consumer Durables, Metals, PSU Banks, FMCG, Auto, and Financial Services indices all slipped between 1% and 1.7%
• The NIFTY Midcap 100 and Smallcap 100 fell 1.45% and 1.65%, respectively

5. NIFTY50 Gainers & Losers

Out of the 50 NIFTY constituents, 43 were in the red:

• Tata Motors led the losers, dropping 3.12% to ₹713
• Other laggards included Tata Steel, L&T, Coal India, Titan, Shriram Finance, Jio Financial Services, and Trent, falling between 2% and 2.6%

However, not all was gloom and doom:

• Bajaj Finserv, Apollo Hospitals, ONGC, Asian Paints, and Wipro managed to buck the trend and trade in the green.

Market Breadth Remains Weak

The overall market sentiment remained negative. On the BSE, 2,722 stocks were declining, while only 1,225 advanced, highlighting the broad-based nature of the correction.

Bottom Line:
Today’s steep correction reflects heightened caution among investors amid global uncertainties and profit-taking after a strong rally. Traders should brace for continued volatility as geopolitical developments and oil prices remain key variables in the days ahead.

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Indian markets closed slightly higher on Wednesday, notching their sixth consecutive day of gains despite a choppy trading session. After a strong opening, key indices gave up most of their early momentum before stabilizing in the final hour.

The Nifty 50 ended the day up 37 points (0.15%) at 25,141.40, while the Sensex dipped 123 points (0.15%) to close at 82,515. The session saw both indices swinging between gains and losses, with the Nifty falling as much as 0.46% intraday.

Banks Drag, Smallcaps Hold Steady

Banking stocks were among the biggest laggards, with the Nifty Bank slipping 169 points (0.30%) to 56,460. The BSE Midcap index also edged lower by 57 points (0.12%) to 46,532.22, while the BSE Smallcap index managed to stay in the green, rising 30 points (0.05%) to 54,281.27.

According to Vinod Nair, Head of Research at Geojit Financial Services, “Profit booking continues in the broader markets, driven by elevated domestic valuations. However, large-cap resilience is supporting the indices, with institutional investors favouring companies that offer stable earnings outlooks.”

Nair also highlighted sector-specific momentum, particularly in Auto and IT stocks. “Auto is benefiting from improved monthly sales, while optimism around a potential US-China trade resolution is boosting sentiment in IT,” he said.

Top Gainers: Tech Stocks Shine

HCL Technologies led the gainers on the Nifty 50, rising 3.19%, followed closely by Infosys, Tech Mahindra, Wipro, and Bajaj Auto. The upbeat performance in IT reflects renewed investor optimism around easing global trade tensions and better-than-expected earnings outlooks.

Top Losers: Financials Under Pressure

At the other end of the spectrum, Shriram Finance was the session’s biggest loser. Other underperformers included Power Grid Corporation, Bharat Electronics, Adani Enterprises, and IndusInd Bank, weighed down by profit booking and subdued sector sentiment.

Business Groups in Focus

Among business conglomerates, the Jaipuria Group stood out, with its market capitalization surging 4.5%. Cosmo First, a Jaipuria Group stock, saw the biggest jump, rising 5%. The Indiabulls Group also had a strong day, gaining 3.88%, followed by the HCL Group, which added 3.2% to its market cap.

On the downside, the Pennar Group witnessed the sharpest drop, with its overall market value falling 2% during the session.

Outlook

Despite global uncertainties and ongoing profit booking in mid and smallcaps, the Indian market remains supported by strong large-cap earnings and positive sentiment in select sectors. With IT and Auto stocks in the spotlight and institutional flows favoring stability, the near-term trend may hinge on macro developments, including global trade negotiations and upcoming economic data.

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India’s economy is projected to grow at 6.3% in FY2025-26, retaining its status as the world’s fastest-growing major economy, according to the latest Global Economic Prospects report released by the World Bank on Tuesday. The projection remains unchanged from earlier forecasts, despite a 40-basis-point downgrade in April 2025 due to global uncertainties.

The report highlights India’s relative resilience amid a challenging global environment marked by weakening exports and slowing investment. “India is projected to maintain the fastest growth rate among the world’s largest economies,” the World Bank stated, though it acknowledged the revised forecast reflects subdued demand from key trade partners and increasing global trade barriers.

Investment Slows, But Services Stay Strong

The World Bank warned that investment growth in India could decelerate, largely due to rising policy uncertainty around the world. Despite this, the economy is expected to continue its upward trajectory, supported by a robust services sector that’s helping offset weaker industrial performance.

Looking further ahead, the World Bank slightly reduced its growth forecast for FY2026-27 by 20 basis points to 6.5%. For FY2027-28, GDP growth is projected to rebound to 6.7%, backed by stronger services and improving export activity.

Global Growth Losing Momentum

The global picture, however, is far less optimistic. The World Bank sharply cut its global growth forecast for 2025 to just 2.3%—the weakest pace since 2008 outside of recessions. That’s down from a 2.7% estimate made in January 2025. Growth in 2026 and 2027 is also expected to remain subdued, at 2.4% and 2.6% respectively.

“Outside of Asia, the developing world is becoming a development-free zone,” said Indermit Gill, the World Bank Group’s Chief Economist. He noted that growth in developing economies has slowed from 6% annually in the 2000s to under 4% in the 2020s, mirroring a broader decline in global trade and investment momentum.

Geopolitics and Trade Tensions Loom Large

The economic outlook has been clouded by rising geopolitical tensions and protectionist trade policies. Earlier this year, the U.S. imposed reciprocal tariffs on trade partners, only to suspend them temporarily in a bid to negotiate better trade terms. U.S. and Chinese officials are currently in London for talks aimed at defusing tensions, but export controls remain in place.

The World Bank noted that if global trade disputes are resolved and tariffs are reduced by half, global GDP growth could see an additional 0.2 percentage point boost in both 2025 and 2026.

RBI’s Bold Moves and India’s Domestic Outlook

India’s forecast stability comes on the heels of an aggressive policy shift by the Reserve Bank of India (RBI), which recently cut its policy repo rate by 50 basis points to 5.50%—its second rate cut in 2025, totaling a 100 bps reduction so far this year. With retail inflation expected to remain subdued at 3.7% in FY26, the RBI’s Monetary Policy Committee emphasized the need to stimulate domestic demand and investment to sustain growth momentum.

While the RBI projects FY26 GDP growth at 6.5%, many independent economists are more cautious, with estimates closer to 6%. The government itself has forecast a growth range of 6.3% to 6.8% for the current fiscal year.

Public Debt Targeting and Fiscal Consolidation

The World Bank also pointed to India’s improving fiscal metrics, expecting continued consolidation supported by higher tax revenues and reduced current expenditures. Public debt, which is currently estimated at 56.1% of GDP for FY26, is projected to decline gradually. Starting April 2026, the government will begin officially targeting a debt-to-GDP ratio of 49–51% by FY2031.

GDP data released last month showed that India’s economy grew by 6.5% in FY2024-25, the slowest pace in four years. This slowdown was largely due to weaker industrial output, though steady services performance and a recovery in agriculture helped cushion the impact.

Bottom Line:
India’s growth engine remains strong in a turbulent global economy, even as trade tensions and policy uncertainty weigh on broader investment sentiment. With a resilient services sector, supportive monetary policy, and fiscal discipline, India is well-positioned to navigate the challenges ahead—though global cooperation will be key to unlocking faster growth for all.

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Japanese auto parts maker Marelli Corporation has filed for Chapter 11 bankruptcy protection in the United States, marking a significant step in its efforts to restructure its finances. The announcement came Wednesday following prolonged negotiations with creditors and rising uncertainty around the company’s financial stability.

Marelli, known for producing automotive lighting systems and interior components, is backed by private equity firm KKR. Despite the filing, the company reassured stakeholders that it expects no disruption to its day-to-day operations.

“Throughout this process and moving forward, Marelli does not expect any operational impact from the Chapter 11 process,” the company said in a statement.

As part of the restructuring effort, Marelli has secured a $1.1 billion financing commitment from its lenders. The company also confirmed that around 80% of its lenders have already agreed to support the reorganization plan.

A key component of Marelli’s turnaround strategy involves the elimination of all its secured debt, which the company believes will provide a more stable foundation for future growth.

The filing represents a critical moment for Marelli as it aims to emerge leaner and more competitive in a challenging global automotive landscape.

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China’s exports of rare earths (a group of 17 minerals at the centre of a trade dispute with Washington) rose 23% in May from a month earlier, according to customs data released on Monday, reported Bloomberg. 

This increase comes two months after Beijing suspended exports of a wide range of rare earths and related magnets, underscoring China’s dominance in the global critical minerals industry with an aim to counter the US in the ongoing trade war with President Donald Trump.

Rare earth shipments increase

China exported 5,865 tons of rare earths in May. Although total shipments so far this year remain below 2024 levels, last month’s jump helped push the year-to-date figure 2.3% higher to 24,827 tons.

The data compiled by Bloomberg does not include rare earth products, which include high-value magnets for electric motors and hard disk drives.

Agenda of the trade talk

US and Chinese officials are set to meet in London this week as the world’s two biggest economies seek to diffuse tensions over tariffs and export restrictions, reported Bloomberg.

Rare earths are expected to top the agenda in the meeting among a list of grievances, which include China’s export controls on rare earth minerals and magnets, which are used widely in high-tech and defence manufacturing.

China’s dominance in rare earths reserves

According to Bloomberg, the export figures offer an incomplete picture of the impact of China’s curbs as they only apply to global sales of seven of the elements. 

Those curbs were imposed on April 4 in retaliation for high tariffs levied on Chinese goods by Donald Trump. China accounts for almost 70% of the world’s production of rare earths.

May data for rare earth products is due to be released on June 18. The breakdown of export destinations should be available June 20, as reported by Bloomberg.

China plans to loosen export restrictions

As reported by Bloomberg, China appeared to loosen its curbs last month, after an announcement on May 12 that the two countries had agreed to charge lower tariffs and negotiate other barriers to trade. The US subsequently accused Beijing of stalling on sales, although delays may have been due to long lead times in China’s permitting system.

European trade officials and carmakers have also complained about disruption to supplies from China.

On Saturday, the Chinese government said it had granted approvals for some rare earths exports, without specifying which countries or industries were covered, in a move that could help smooth Monday’s talks with the US, according to Bloomberg.

Decline in rare earths product sales

Customs data showed that rare earth and product sales to the US in April dropped 37% from a month earlier to about 1,700 tons. Within that, rare earth magnet sales fell more steeply by 58% to 246 tons. Magnet sales to the whole world were 51% lower at around 2,600 tons.

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