Domestic equity markets, including the Sensex and Nifty 50, are likely to open on a weaker note on Wednesday due to heightened geopolitical tensions between India and Pakistan. The Indian Armed Forces launched ‘Operation Sindoor’, targeting terrorist infrastructure in Pakistan and Pakistan-occupied Kashmir (PoK), which has raised investor caution.

Despite this, Asian markets traded higher, buoyed by optimism around renewed US-China trade negotiations. Meanwhile, US markets closed lower for a second consecutive session, weighed down by weak performances in major healthcare stocks.

Domestic Market Recap

On Tuesday, Indian indices closed in the red due to rising border tensions:

• Sensex dropped by 155.77 points (0.19%) to close at 80,641.07
• Nifty 50 slipped by 81.55 points (0.33%) to settle at 24,379.60

Gift Nifty

Gift Nifty was trading near 24,350, around 81 points lower than the previous Nifty futures close, hinting at a weak start for Indian markets.

Wall Street Performance

US indices saw a broad decline on Tuesday:

• Dow Jones: -389.83 pts (0.95%) to 40,829.00
• S&P 500: -43.48 pts (0.77%) to 5,606.90
• Nasdaq: -154.58 pts (0.87%) to 17,689.66

Gold Prices

Gold slipped amid reduced demand for safe-haven assets as US-China talks lifted investor confidence:

• Spot gold: -1.3% to $3,386.36/oz
• US gold futures: -0.8% to $3,395.20/oz

Crude Oil Prices

Oil prices edged higher on signs of supply tightening in the US and robust demand in Europe and China:

• Brent crude: +0.69% to $62.58/barrel
• WTI crude: +0.86% to $59.60/barrel

Major Global Events Driving Sentiment

1. Operation Sindoor: The Indian Armed Forces struck nine terrorist locations in Pakistan and PoK in a “focused and measured” operation aimed at disrupting terror networks planning attacks on Indian soil.
2. US-China Trade Talks: US Treasury Secretary Scott Bessent and trade envoy Jamieson Greer are set to meet with China’s top economic official in Switzerland this weekend—an important step towards de-escalating the ongoing trade war.
3. India-UK Trade Deal: India and the UK finalised a historic free trade agreement, under which India will cut automotive import tariffs to 10%, down from over 100, and lower import duties on UK goods such as whisky, gin, cosmetics, and medical devices

US Trade Deficit

The US trade deficit widened sharply in March by $17.3 billion, reaching a record $140.5 billion, surpassing economists’ expectations.

China’s Interest Rate Cuts

The People’s Bank of China (PBOC) announced a 10 bps cut in key interest rates and a 50 bps reduction in reserve requirements to stimulate economic activity.

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