Visa Fee Hike and Trade Negotiation Delays Dampen Sentiments

U.S. stocks closed lower Tuesday, ending a three-session streak of record highs after Federal Reserve Chair Jerome Powell emphasized the central bank’s need to balance inflation concerns against weakening employment in future rate decisions.

Major indices declined throughout the session, with the S&P 500 retreating 0.55% and the Nasdaq falling 0.73%. The selloff followed Powell’s comments at a Rhode Island event where he characterized equity prices as “fairly highly valued” after their recent run to records.

Technology stocks led the decline, with Nvidia dropping 2.8% despite announcing plans to invest up to $100 billion in OpenAI the previous day. Amazon, Microsoft, and Apple also posted losses as investors reassessed elevated valuations in the AI-driven rally.

Powell’s speech struck a cautiously dovish tone, leaving the door open for future rate cuts while providing no timeline or magnitude for potential moves. His remarks on high inflation risks and elevated equity valuations tempered investor enthusiasm for aggressive monetary easing.

Micron exceeded earnings expectations on both revenue and profit, reflecting strong AI-related demand and providing a positive signal for the broader technology cycle amid increased investor scrutiny of chipmaker performance.

Oil prices extended gains for a second consecutive day as industry data showed declining U.S. crude inventories, reinforcing supply tightening concerns. Brent crude rose 27 cents to $67.90 per barrel, while West Texas Intermediate gained 28 cents to $63.69.

Gold reached intraday records above $3,770 per troy ounce, supported by expectations for additional Fed rate cuts and persistent geopolitical uncertainties.

The Nifty saw extraordinary volatility, marking its third consecutive day of decline with a marginal fall of 32 points to close at 25,169. The day was a tug of war between bulls and bears; after a flat open, the index dropped sharply by 118 points, staged a powerful 178-point recovery, and then gave up a significant portion of those gains in the final hour of trading.

Strong performance in India’s core industries, however, provided some cushion to the macroeconomic outlook.

Sustained foreign institutional investor selling pressured Indian markets, driven by concerns over Trump’s proposed $100,000 H-1B visa fee and uncertainty surrounding India-US trade negotiations. IT stocks bore the brunt of the selloff as investors factored in potential margin compression risks for outsourcing companies.

Bank Nifty found support from mid-sized banks and public sector lenders, offsetting broader market weakness.

The rupee hit a record low of 88.75 against the dollar, weighed down by foreign fund outflows and trade deficit concerns that heightened investor risk aversion.

Despite the volatile price action, Nifty managed to hold above its previous swing high of 25153 on a closing basis and maintained its position above the crucial 20 DEMA support level, which is currently placed at 25041. On the upside, the key resistance levels to watch for are 25331 and 25448.

Indian markets are likely to start the day on a weak note as rising visa costs and uncertainty over trade negotiations weigh on investor confidence.

Source: HDFC Securities Prime Daily, 24 Sept 2025

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