Share Market News / Trump tariffs were a disaster, these 7 young men from India saved the market from sinking

Share Market News: Despite the ongoing downturn in the Indian stock market, the decline hasn't been as drastic as many feared. Experts had predicted a much steeper drop, but several critical factors have acted as safeguards, preventing a deeper plunge. While various reasons for the market's weakness are being discussed among investors, it's equally important to examine the elements that capped the fall short of 1,000 to 1,500 points.

This moderation means that investor losses were contained to around ₹5 lakh crore, rather than ballooning to ₹10-12 lakh crore. Notably, even with an intraday dip exceeding 600 points, the Sensex has been trading with a more modest decline of 450-500 points.

The big question now is: What are those seven pivotal reasons that averted a major crash? According to market analysts, the primary driver is the recent GST reforms, which have provided substantial support. Crude oil prices remaining below $70 per barrel continue to favor India. Festive season demand has surged, positively influencing market sentiment. Expectations of a Fed rate cut are fostering optimism. Local investors are ramping up purchases, and the potential IPO announcement from Reliance Industries' telecom arm could deliver a significant boost. Finally, global rating agencies maintain strong confidence in India's economy. Let's delve deeper into these factors alongside the latest market data.

Market Dip: Expected vs. Reality

As of 12:10 PM today, the stock market is experiencing a pullback, but it's far milder than projections. Data from the Bombay Stock Exchange shows the benchmark Sensex down by about 550 points, trading at 81,075.05. During the session, it touched a low of 80,940.67, reflecting a roughly 700-point drop at its worst. Amid threats of a 50% tariff hike, pundits had forecasted a 1.5-2% slide—equating to 1,200-1,500 points.

On the National Stock Exchange, the Nifty index is down 165.70 points at 24,802.05, having hit an intraday low of 24,755.60. Just yesterday, Nifty had crossed the psychological 25,000 mark. While a drop of over 300 points was anticipated, the actual movement has stayed within a narrower band.

This relatively contained correction isn't accidental. Over recent days, we've seen 500-600 point swings even on ordinary trading sessions. Today marks a critical juncture with the 50% tariff set to kick in after midnight, and no indications of mitigation yet. This uncertainty fueled predictions of a sharper decline.

The 7 Factors That Shielded the Market from a Steeper Fall

Here are the seven key elements that have helped stabilize the Indian equity markets amid global pressures:

1. GST Reforms Announcement: On August 15, from the ramparts of the Red Fort, Prime Minister Narendra Modi unveiled GST slab revisions. The proposal simplifies the structure to just 5% and 18% rates, phasing out the 12% and 28% slabs, while introducing a special 40% bracket for select products. Analysts believe this will lower prices on many goods, boosting consumption and providing a tailwind to the economy.
2. Decline in Crude Oil Prices: Although international crude prices are at a two-week high, they remain comfortably under $70 per barrel. Brent crude is hovering around $68, and US oil at $64. This keeps India's import costs in check, easing pressure on the current account and supporting market stability.
3. Festive Season Demand Surge: With the festive period underway, consumer demand is picking up steam. Shoppers are front-loading purchases ahead of Pitru Paksha, while retailers are stocking up for the post-period rush. This heightened activity is translating into positive ripples across sectors, bolstering market resilience.
4. Anticipated Fed Rate Cuts Boosting FPI Inflows: The US Federal Reserve's policy meeting on September 16-17 is expected to deliver a 0.25% interest rate reduction. This could encourage foreign portfolio investors (FPIs) to return to emerging markets like India. So far this year, FPIs have withdrawn over ₹1.17 lakh crore from Indian equities, but a rate cut might reverse that trend.
5. Sustained Buying by Retail Investors: Domestic institutional investors (DIIs) and retail participants have been steadfast buyers. From January to July, Indian investors poured in more than ₹4 lakh crore into the markets. This consistent inflow is acting as a counterbalance, preventing excessive downward momentum.
6. Upcoming Jio IPO Buzz: Reliance Industries' annual general meeting is slated for August 27, where Chairman Mukesh Ambani might announce an IPO for the telecom subsidiary Jio. Poised to be India's largest-ever public offering, this development is injecting optimism and could energize the broader market.
7. Enduring Confidence from Global Rating Agencies: International agencies continue to express faith in India's growth story. S&P recently upgraded India's rating to BBB positive. While Fitch and Moody's haven't altered their ratings, they've downplayed the impact of tariffs on the economy, reinforcing investor sentiment.

Expert Insights

Anuj Gupta, Director at YA Wealth Global Research, notes that India's stock market has matured significantly. "The market has already digested much of the 50% tariff impact, limiting today's downside. Investors know this measure won't last long, with ongoing India-US trade talks likely to yield a deal soon. Favorable crude prices, GST optimism, and the potential Jio IPO are all contributing to buoyancy. Moreover, rating agencies' endorsements underscore India's economic strength."

In summary, while headwinds persist, these supportive factors have turned what could have been a rout into a manageable correction. Investors should monitor upcoming events like the Fed meeting and Reliance's AGM for further cues on market direction. As always, diversified strategies and long-term perspectives remain key in volatile times