Key gauges end lower amid geopolitical tension

Indianequity benchmarks ended lower for the second consecutive session on Friday,primarily weighed down by escalating geopolitical tensions between India andPakistan. After an initial uptick, the markets witnessed a sharp decline in thefirst half, however, a rebound in select heavyweight stocks helped pare somelosses later in the session. 

Some of the important factorsin today’s trade:  

Indian firms should avoidre-routing of goods from China to US: TheGlobal Trade Research Initiative (GTRI) has said domestic exporters should notuse India as a destination for re-routing goods originating from high-tariffcountries like China to the US. 

India-Pakistan trade willcome to complete halt: Federation of IndianExport Organisations (FIEO) has said that with Pakistan suspending all tradeties with India, including that routes through third countries, the two-waycommerce will now come to a complete halt.  

Rupee falls against Dollar: Indianrupee pared its initial gains and settled for the day lower against the USdollar, amid heightened geopolitical tensions and a negative trend in thedomestic markets. 

India, South Africa discusspossibility of settlement of trade in local currency: Thecommerce ministry said India and South Africa have discussed possibility ofsettlement of trade in local currency and unified payment linkage system with aview to further strengthen economic ties. 

Global trade sentimentimproves: European markets were trading higher with signs of easingSino-U.S. trade tensions and some upbeat corporate earnings helping underpininvestor sentiment. Asian markets settled mostly higher on Friday amid signsthe Trump administration is making progress on trade negotiations and that theU.S. Federal Reserve may cut interest rates earlier than expected, if labor andgrowth data weaken notably. 

Finally, the BSE Sensex fell 588.90 points or 0.74% to79,212.53, and the CNX Nifty was down by 207.35 points or 0.86% to24,039.35.    

The BSE Sensex touched high and low of 80,130.66 and 78,605.81respectively. There were 7 stocks advancing against 23 stocks declining on theindex.

The broader indices ended in red; the BSE Mid cap index fell2.44%, while Small cap index was down by 2.56%.

The lone gaining sectoral index on the BSE was IT up by 0.22%,while Utilities down by 2.96%, Realty down by 2.87%, Power down by 2.77%,Telecom down by 2.56% and PSU down by 2.52% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 1.36%, TechMahindra up by 1.06%, Infosys up by 0.60%, Ultratech Cement up by 0.46% andIndusind Bank up by 0.32%. On the flip side, Adani Ports &SEZ down by3.61%, Axis Bank down by 3.48%, Eternal down by 3.41%, Bajaj Finserv down by2.85% and Power Grid Corporation down by 2.56% were the top losers.

Meanwhile, Federation of Indian Export Organisations (FIEO) hassaid that with Pakistan suspending all trade ties with India, including thatroutes through third countries, the two-way commerce will now come to acomplete halt.  

Exporters’ body said following the terror attack in Pahalgam,which killed 26 people, mostly tourists, India took a series of measuresincluding immediate shutting down of the Attari land-transit post, used formovement of certain kinds of goods. Besides, India has announced expulsion ofPakistani military attaches, and suspension of the Indus Water Treaty of 1960.In retaliation, Pakistan announced suspension of 'all trade' with India,including that routes through third countries. 

Commenting on the decision of the neighbouring country, FIEOPresident S C Ralhan said India's bilateral trade with Pakistan is minisculeand is just 0.06 per cent of India's total trade. He said ‘we have minusculetrade with Pakistan, which is constantly declining’. He noted that duringApril-January 2024-25, the same was not even $500 million as against theoverall trade of over $800 billion in the same period. He added that the tradewill now come to a complete standstil affecting supply of some key products toPakistan, hitting their economy further.

The CNX Nifty traded in a range of 24,365.45 and 23,847.85.There were 9 stocks advancing against 41 stocks declining on the index.  

The top gainers on Nifty were SBI Life Insurance up by 5.15%,Tech Mahindra up by 1.02%, TCS up by 0.95%, Infosys up by 0.58% and UltratechCement up by 0.25%. On the flip side, Shriram Finance down by 8.13%, AdaniEnterprises down by 3.95%, Adani Ports &SEZ down by 3.79%, Trent down by3.75% and Eternal down by 3.67% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased5.68 points or 0.07% to 8,413.12, France’s CAC rose 56.75 points or 0.75% to7,559.53 and Germany’s DAX gained 176.09 points or 0.79% to 22,240.60.

Asian markets settled mostly higher on Friday tracking WallStreet gains overnight amid signs that the US is making progress on tradenegotiations and that the Fed might cut interest rates earlier than expected iflabor and growth data weaken notably. Japanese shares gained as the governmentunveiled emergency economic measures to counter the impact of US tariffs, aheadof a second round of bilateral trade talks with the US to be held next week.Meanwhile, the Japanese yen declined after Tokyo’s Core Inflation Jumped to3.4% in April, the highest in two years. However, Chinese shares declined asChina denied the existence of negotiations on a deal with the US and demandedthat the US revoke all unilateral tariffs.