Sensex Slips 100 Points, Nifty Falls Below 25,500 Amid Trade Deal Uncertainty; FMCG and Oil & Gas Stocks Outperform

Mumbai, July 7, 2025: Indian equity benchmarks opened lower on Monday, driven by mounting concerns over the fate of an India-US trade agreement and persistent geopolitical tensions in the Middle East. The Sensex dropped 106.48 points to 83,326.41, while the Nifty slipped 30.10 points to 25,430.90 in early trade.

Rising Volatility Amid Trade Jitters

Investor anxiety was palpable, reflected in a 3% jump in the India VIX, the volatility index, which was trading around 12.6125 at 9:45 AM IST, up from its previous close of 12.315 on Friday. This surge in volatility indicates heightened market nervousness. The sentiment was primarily dampened by fears of potential US trade retaliation, including the re-imposition of a 26% reciprocal tariff on Indian goods if a trade deal isn’t finalised by the July 9 deadline.

Ajit Mishra of Religare Broking acknowledged that while trade concerns cast a shadow, expectations of an interim deal between India and the US offered some cushion to the downside. Reports suggest that India and the US are in detailed negotiations, with India proposing a “self-certification” system for GM-free US food imports and pushing for tariff elimination on labour-intensive exports.

Meanwhile, India has also formally notified the WTO of its plan to impose retaliatory tariffs on US automobile parts, signalling its readiness to assert its trade rights.

Broader Market Mixed, Sector Rotation in Focus

The market breadth was negative, with 1,442 stocks declining versus 1,220 advancing, indicating a cautious mood across the board. Sectoral performance was largely subdued, with some defensive sectors showing resilience:

• Lagging sectors: Nifty Metal (-0.38%), Nifty IT (-0.36%), Nifty Smallcap 100 (-0.25%), Nifty Auto, Bank, Consumer Durables, and Realty indices all dipped between 0.12% and 0.17%.
• Gainers: Nifty FMCG rose 0.47%, Nifty Oil & Gas advanced 0.45%, and Nifty Energy edged up 0.01%, indicating a rotation into defensive and energy-related stocks.

Key Stock Movers

• Top Nifty gainers included Trent, Asian Paints, HDFC Life Insurance, HUL, and Tata Consumer Products
• Notable underperformers were Bharat Electronics, HCL Tech, Tech Mahindra, Eternal, and Hindalco
• Nykaa shares climbed 2% after its Q1 business update projected consolidated revenue growth at the lower end of the mid-20% range, with GMV growth expected to exceed that
• Trent rose 1% after Bernstein reaffirmed an “Outperform” rating, citing strong 20% YoY revenue growth in Q1
• IndusInd Bank declined after reporting a 3.9% YoY and 3.1% QoQ drop in net advances, along with a slight decline in deposits

Technical Outlook

The Nifty’s late rebound on Friday from the 25,330 zone to near 25,450 hints at a possible near-term upside.

• Support levels are pegged at the 25,250–25,300 zone.
• Resistance for the Nifty is seen at 25,600.
• A decisive breakout above 25,600 could pave the way toward 25,700 and 26,200.

For the Sensex, immediate support is around 83,335, with resistance at 83,501.

Outlook

With major companies like TCS and DMart scheduled to release their Q1 results later this month (Tata Technologies, a Tata Group company, is scheduled to meet on July 14, 2025, to consider its Q1 FY26 results, while Avenue Supermarts (DMart) has already released Q1 updates), and uncertainty persisting around global trade policies, analysts expect continued volatility. All eyes remain on upcoming macroeconomic data and the resolution (or escalation) of trade negotiations between India and the US, especially with the July 9 tariff deadline looming.

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