Sensex, Nifty Slip as Global Tensions and Profit Booking Weigh on Markets

Mumbai, June 17, 2025: Indian equity markets opened lower on Tuesday as investors booked profits following Monday’s broad-based rally. The cautious tone was driven by two key overhangs: escalating geopolitical conflict in the Middle East and uncertainty surrounding the US Federal Reserve’s upcoming rate decision.

Tensions between Israel and Iran flared after reports of intensified military activity near the Gaza border and missile strikes targeting Iranian-backed assets, triggering concerns about potential oil supply disruptions. This pushed Brent crude prices up by 0.53% to USD 73.62 per barrel, raising inflationary risks for import-dependent economies like India.

Simultaneously, investors turned defensive ahead of the Federal Open Market Committee (FOMC) policy announcement due Wednesday, June 18, 2025. While the Fed is widely expected to hold rates steady at 5.25%–5.50%, analysts remain divided on forward guidance. Sticky inflation in core services and recent hawkish remarks from Fed officials have left room for uncertainty around the timing of future rate cuts.

Index Performance Snapshot

By 9:30 AM, the BSE Sensex had shed 127.02 points, resting at 81,669.13. Simultaneously, the NSE Nifty dropped 55 points, registering at 24,891.50.

This decline follows a nearly 1% rally in the prior session, driven broadly by strong performance in information technology and oil-linked shares.

Sector-Wise Moves and Key Gainers/Losers

Top Decliners on Sensex:

• IndusInd Bank
• Tata Motors
• Titan
• Bajaj Finance
• Sun Pharma
• UltraTech Cement

Notable Gainers on Sensex:

• Kotak Mahindra Bank
• Axis Bank
• NTPC
• Adani Ports

Global Market Pulse

Asian equities opened Tuesday on a mixed note, reflecting investor uncertainty over geopolitical tensions and interest rate expectations.

Japan’s Nikkei 225 rose 0.45% in early trade, buoyed by a weaker yen and optimism around corporate earnings from technology exporters. South Korea’s Kospi also posted modest gains of 0.35%, driven by strength in chipmakers such as Samsung Electronics amid improved global semiconductor demand.

In contrast, Mainland China’s Shanghai Composite slipped 0.28%, weighed down by weak economic data and persistent concerns over a sluggish property market recovery. Hong Kong’s Hang Seng Index dropped 0.51%, dragged by declines in tech and real estate shares amid foreign outflows and regulatory worries.

Meanwhile, Wall Street ended Monday in positive territory. The Dow Jones Industrial Average climbed 0.49%, the S&P 500 advanced 0.77%, and the Nasdaq Composite gained 0.95%. The up move was supported by cooling producer price inflation data and hopes that the US Federal Reserve may adopt a more dovish tone in its June 18 policy meeting.

However, the global mood remained cautious as markets balanced relief from lower US inflation readings with anxiety over potential flare-ups in the Middle East and central bank guidance.

FII/DII Activity and Crude Oil Update

Despite heightened geopolitical risks stemming from Middle East tensions, global equity markets including India have managed to hold firm, largely due to sustained domestic investor participation.

According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, foreign institutional investors (FIIs) remain in risk-off mode, pulling out capital amid concerns over the US interest rate trajectory and geopolitical instability. However, retail investors, channelled through Systematic Investment Plans (SIPs) and mutual funds, have stepped up buying during every dip, viewing corrections as strategic entry points rather than exit triggers.

In the past four trading sessions, market data shows a sharp contrast in institutional behaviour:

• Foreign Institutional Investors (FIIs) offloaded Indian equities worth ₹8,080 crore, primarily from financials and high-beta sectors.
• In contrast, Domestic Institutional Investors (DIIs) absorbed the pressure, pumping in ₹19,800 crore, supported by steady retail inflows and domestic confidence.

This capital divergence has helped cushion the Indian market from sharper corrections, even in the face of global volatility.

Adding to investor caution, Brent crude oil climbed 0.53% to USD 73.62 per barrel in early trade on Tuesday. Renewed concerns over supply disruptions drove the uptick due to escalating conflict between Israel and Iran, alongside seasonal demand increases.

Oil analysts warn that any further escalation in the Middle East could push crude prices even higher, potentially stoking inflationary pressures in energy-importing nations like India a risk that investors are closely monitoring as they navigate both global and domestic headwinds.

On Monday’s trading activity:

• FIIs recorded net outflows of ₹2,539.42 crore
• DIIs reported net inflows of ₹5,780.96 crore

Meanwhile, Brent crude prices edged up 0.53% to USD 73.62 per barrel amid supply worries due to geopolitical instability.

Monday’s Rally Recap

Markets witnessed a robust rebound on Monday:

• BSE Sensex soared 677.55 points to close at 81,796.15
• NSE Nifty climbed 227.90 points, ending the session at 24,946.50

With the Federal Reserve’s interest rate decision looming, traders are expected to proceed with greater caution in the coming sessions.

Disclaimer:  At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.

If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.

Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations