Indian Markets Set for Lower Open Amid Global Weakness

Indian markets extended their losing streak for a third consecutive session on Tuesday, with both major indices closing marginally lower. The Sensex slumped by 57.87 points (0.07%) to close at 82,102.10, while the Nifty 50 moved down by 32.85 points (0.13%) to settle at 25,169.50. This persistent decline reflects growing investor anxiety over multiple headwinds, particularly uncertainty surrounding India-US trade talks and recent developments regarding H-1B visa regulations.

The Trump administration’s proposed changes to the H-1B visa selection process, prioritizing higher-skilled and better-paid foreign workers, came just days after the White House introduced a substantial $100,000 annual fee for these visas. This dual policy shift has significant implications for India’s technology sector, which relies heavily on these visas, creating a cloud of uncertainty that is weighing on market sentiment. The Gift Nifty, a key indicator of market direction, was trading near 25,190—approximately 65 points lower than the previous Nifty futures close—strongly hinting at a negative start for Wednesday’s trading session.

The negative momentum in Indian markets is being amplified by significant weakness in global equities. Overnight, US stocks ended lower, breaking a three-session string of record closing highs. The decline was triggered by comments from Federal Reserve Chair Jerome Powell, who emphasized the challenging task of balancing dual risks. The Dow Jones Industrial Average fell by 88.76 points (0.19%) to close at 46,292.78, the S&P 500 dropped 36.83 points (0.55%) to end at 6,656.92, and the Nasdaq Composite saw a more pronounced decline of 215.50 points (0.95%), finishing at 22,573.47.

Powell’s remarks highlighted that the central bank must carefully navigate between the risks of rising inflation, which he noted remain tilted upward, and a weakening job market, where risks lean downward. This ‘challenging scenario,’ as described by Powell, suggests a more cautious approach to potential interest rate cuts than some investors had hoped for, dampening risk appetite worldwide. The reaction in Asian markets, which also slipped in early trading, confirms that the Fed’s stance is a primary driver of global financial sentiment, directly impacting emerging markets like India.

While equities faced pressure, commodity markets presented a mixed picture. Crude oil prices edged higher, with Brent crude gaining 0.40% to $67.90 per barrel and US West Texas Intermediate (WTI) crude trading 0.46% higher at $63.70 per barrel. This modest uptick suggests that energy traders are weighing broader supply dynamics against the backdrop of uncertain global economic growth.

Conversely, gold prices hovered near record highs, with spot gold trading steady at $3,762.05 per ounce, while US gold futures were trading 0.6% lower at $3,794.50. The resilience of gold underscores its role as a safe-haven asset during periods of market uncertainty. Investors are flocking to the precious metal as they assess the implications of Powell’s cautious tone on interest rates, which can influence the opportunity cost of holding non-yielding assets like gold. The metal’s strength indicates that market participants are hedging against potential volatility and slower-than-expected monetary easing from the Federal Reserve.

The confluence of domestic concerns and international headwinds creates a complex environment for Indian equities. The immediate trigger for Wednesday’s expected weak opening is the global sell-off, but the underlying domestic issues—specifically the H-1B visa fee hike and trade talk uncertainties—add layers of persistent risk. These factors are likely to keep investor sentiment subdued in the near term.

Market participants will be closely monitoring any further commentary from Federal Reserve officials for clues on the future path of US interest rates, as this remains the dominant global narrative. Simultaneously, developments in US-India diplomatic and trade relations will be critical for restoring confidence in sectors exposed to these policies. For now, the data suggests a cautious approach prevails, with the Gift Nifty signaling that Indian markets are set to absorb the global weakness at the opening bell.