Introduction
Indian equity indices Sensex and Nifty 50 are poised for a flat opening on Tuesday as persistent concerns over US tariff policies and H-1B visa fee hikes continue to dampen market sentiment. While Asian markets showed strength and US indices rallied to record highs overnight, domestic IT stocks faced significant selling pressure for the second consecutive session. Gift Nifty trading near 25,271, approximately 7 points lower than the previous Nifty futures close, suggests a subdued start for Indian markets as global uncertainties offset positive domestic economic indicators.
Key Points
- Sensex fell 466 points and Nifty dropped 125 points on Monday due to IT stock selloff triggered by US H-1B visa fee increases.
- US stock markets closed at record highs for the third straight session, with Nasdaq leading gains at 0.70%.
- India’s core infrastructure sectors grew 6.3% in August 2025, the highest growth rate in 13 months.
Domestic Market Under Pressure from US Policy Shifts
Indian markets extended their decline for the second straight session on Monday, with the Sensex slumping 466.26 points (0.56%) to close at 82,159.97 and the Nifty 50 moving down 124.70 points (0.49%) to settle at 25,202.35. The primary driver behind this downturn was a heavy selloff in IT stocks following the United States’ decision to increase H-1B visa fees, a move that directly impacts Indian technology companies with significant US operations. This policy change has created uncertainty around cost structures and profitability for India’s IT sector, which relies heavily on skilled worker mobility between the two countries.
The market weakness comes despite positive developments in India’s core infrastructure sectors, which grew 6.3% in August 2025—marking a 13-month high. This represents a significant acceleration from the 3.7% growth recorded in July and a notable recovery from the 1.5% contraction witnessed in August of the previous year. However, for the April-August period of FY26, the sectors expanded by 2.8%, down from the 4.6% growth recorded during the same period last year, indicating that while recent performance is encouraging, broader challenges remain.
US Markets Rally to Record Highs Amid Divergent Trends
In stark contrast to Indian market performance, US stock market indexes closed at record highs for the third consecutive session on Monday, driven primarily by gains in technology stocks. The Dow Jones Industrial Average gained 66.27 points (0.14%) to close at 46,381.54, while the S&P 500 rose 29.39 points (0.44%) to end at 6,93.75. The Nasdaq Composite led the rally with a 157.50 point increase (0.70%), finishing at 22,788.98. This divergence highlights how different market segments are responding to the same policy environment, with US tech companies benefiting from domestic conditions while their Indian counterparts face headwinds.
The resilience of US markets despite ongoing trade tensions underscores the complex interplay between domestic economic strength and international policy disputes. While Asian markets traded higher, providing some positive regional context, the specific impact of US visa and tariff policies on Indian IT stocks has created a disconnect between global equity trends and domestic market performance. This divergence suggests that sector-specific vulnerabilities can outweigh broader market optimism when policy changes directly affect key industries.
Diplomatic Engagements and Commodity Market Movements
On the diplomatic front, External Affairs Minister Dr S. Jaishankar met US Secretary of State Marco Rubio on Monday on the sidelines of the 80th UN General Assembly. Rubio highlighted Washington’s strategic partnership with New Delhi and affirmed that both nations would continue working together to advance a free and open Indo-Pacific, particularly through the Quad alliance. These high-level engagements provide a counterbalance to trade tensions, suggesting that while specific policy disputes may create market volatility, the broader strategic relationship remains intact.
Commodity markets showed minimal movement, with Brent crude slumping by 0.15% to $66.47 per barrel and US West Texas Intermediate (WTI) crude trading 0.06% lower at $62.64 per barrel. The stability in oil prices provides some relief for import-dependent economies like India, as energy cost pressures remain contained. However, the flat trading in crude suggests that markets are awaiting clearer signals on global demand and supply dynamics amid the ongoing policy uncertainties.
Market Outlook and Key Factors to Watch
Looking ahead, Indian market participants will closely monitor developments in US-India trade relations, particularly any clarifications or modifications to the H-1B visa fee structure that might alleviate pressure on IT stocks. The 6.3% growth in core infrastructure sectors provides a solid domestic foundation, but sustained market recovery will likely require resolution of the external policy concerns that have triggered the recent selloff.
The Gift Nifty trading level near 25,271, slightly below the previous Nifty futures close, indicates that caution continues to prevail among international investors. Market direction in the coming sessions will depend on whether domestic economic strengths can overcome external policy headwinds, and whether diplomatic engagements translate into more favorable trade conditions for affected sectors. The divergence between record-high US markets and struggling Indian IT stocks serves as a reminder of how targeted policy changes can create winners and losers in an interconnected global economy.
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