Why Did Indian Stock Markets End the Week Lower Amid Trade Deal Concerns?

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Why Did Indian Stock Markets End the Week Lower Amid Trade Deal Concerns?

Synopsis

In a week marked by investor caution ahead of the critical US-India trade deadline, Indian equity markets faced declines. With profit booking taking its toll, experts weigh in on the implications for the upcoming corporate earnings season.

Key Takeaways

  • Indian equity markets faced declines amid trade deal jitters.
  • Profit booking was evident after recent gains.
  • Both Nifty and Sensex slipped 0.7% over the week.
  • Defensive sectors like IT and healthcare showed positive performance.
  • Key technical levels indicate potential market consolidation.

Mumbai, July 5 (NationPress) The Indian equity markets concluded the week on a down note as investors grew wary in anticipation of the pivotal July 9 US-India trade deadline and the onset of the corporate earnings season, analysts indicated on Saturday.

Both primary indices — the Sensex and the Nifty — declined by 0.7% each over the week, as broader market sentiment remained overshadowed by global unpredictability and profit-taking following a recent surge.

The Nifty wrapped up the week at 25,461, while the Sensex finished at 83,432.89. The indices had kicked off the week with a robust breakout, but that momentum waned amid worries of a potential delay in finalizing trade agreements.

Nevertheless, reports hinting at a possible interim deal between India and the US helped mitigate losses in the week’s latter half.

Ajit Mishra from Religare Broking Limited noted that the pullback was predominantly driven by profit booking from investors after recent gains.

“The cautious sentiment was apparent with the impending trade deadline. However, optimism surrounding a possible agreement between India and the US provided a cushion,” he remarked.

India's fiscal state remains robust, bolstered by a strong Rs 2.69 lakh crore dividend transfer from the RBI, which has helped keep the fiscal deficit at just 0.8% of the annual target.

June GST collections also stayed strong, climbing 6.2% year-on-year (YoY) to Rs 1.84 lakh crore.

Vinod Nair, Head of Research at Geojit Financial Services, stated, “The week witnessed some consolidation after significant gains in preceding sessions. Global cues remained mixed, and investors chose to remain cautious ahead of the US tariff decision.”

FIIs turned wary due to high valuations, but support from DIIs prevented the market from experiencing a sharp decline,” Nair added.

From a sectoral standpoint, defensive sectors such as IT and healthcare performed well, buoyed by stock-specific movements and steady demand.

Conversely, rate-sensitive sectors like banking, auto, and realty faced pressure due to profit booking.

FMCG stocks also fell slightly. However, defense stocks saw robust buying after the government approved several high-value contracts.

Technically, the market entered a phase of consolidation. Bajaj Broking Research observed that the Nifty formed a small bear candle with higher highs and lows on the weekly chart, indicating consolidation amid stock-specific actions after the recent strong upward trajectory.

“Key support levels are identified around 25,150–25,200, aligning with the 20-day exponential moving average, while resistance is anticipated near the 25,600–25,740 zone,” according to Angel One.

“A breakout above this range could ignite the next phase of the rally,” the brokerage concluded.

Point of View

It's essential to recognize that the Indian equity markets are currently navigating through a challenging landscape, marked by external trade concerns and internal profit-taking. While short-term fluctuations may cause unease, the underlying financial indicators suggest resilience. Investors must remain vigilant, balancing caution with the optimism surrounding potential trade agreements.
NationPress
21/07/2025

Frequently Asked Questions

What caused the decline in Indian stock markets this week?
The decline was primarily due to investor caution ahead of the US-India trade deadline and profit booking following recent gains.
What are the current levels of the Nifty and Sensex?
The Nifty closed at 25,461 and the Sensex at 83,432.89 at the end of the week.
How are global factors impacting Indian markets?
Global uncertainty and mixed cues are affecting sentiment, leading investors to adopt a cautious approach.
What sectors showed resilience during the week?
Defensive sectors such as IT and healthcare outperformed, supported by steady demand and stock-specific actions.
What are the projections for market support and resistance?
Key support levels are around 25,150–25,200, while resistance is expected near 25,600–25,740.