Indian markets are falling due to US-China tensions and precious metals are hitting record highs

Mumbai: Indian stock indices ended lower for the second straight session on Tuesday as risk appetite weakened in Asia amid investor unrest over simmering tensions between the US and China. Precious metals such as gold extended their winning streak thanks to growing demand for safe-haven assets. The Nifty ended at 25,145, down 0.3%, or 81 points. The Sensex ended at 82,029, down 0.4% or 297 points.

“After a sharp recovery of around 700 points towards 25,300 levels, a retracement move was expected and there was selling pressure on the weekly expiry of NSE contracts,” said Nilesh Jain, Head of Derivatives and Technical Research, Centrum Broking. “However, the intention remains positive.”

Jain said global markets are also unsupportive, and the euphoric rally in precious metals has led to some diversion of funds from equities to gold, driven by investors’ fear of missing out.

Gold prices hit a new all-time high on Tuesday as it rose 1.6% to ₹1,29,430 per 10 grams.

“Investors can continue to hold precious metals, but the risk-reward is unfavorable for new purchases,” he said. All sector indices closed lower on Tuesday. The Nifty PSU Bank index fell 1.5%, while the consumer durables and media indices fell over 1% each.

“Bank stocks lost some ground on Tuesday due to profit-taking at higher levels, but further declines could be used as a buying opportunity,” said Gaurav Sharma, head of research at Globe Capital. Jain said Nifty is expected to cross 25,500 levels while Bank Nifty is likely to outperform and move above 57,500 levels in October.

The Nifty Mid-cap 150 and Small-cap 250 indices fell 0.7% and 0.9% respectively on Tuesday. Of the 4,334 shares traded on BSE, 1,286 advanced while 2,935 declined.

Over the past week, the midcap and smallcap indices fell 0.2% and 0.8% respectively. Foreign portfolio investors (FPIs) sold shares worth a net ₹1,508.5 crore on Tuesday. Their domestic counterparts bought shares worth ₹3,661.1 crore. In October, global investors offloaded shares worth ₹1,100.5 crore.

“Interest in the banking and finance package is expected to continue, especially among PSU banks and select private banks,” Sharma said.

“The auto sector also looks promising with the festive season approaching after the rationalization of GST.”