Stock market today: Nifty 50, Sensex move lower; is it a calm before the storm? | Stock Market News

After gaining nearly 7 per cent this month, the Sensex and Nifty 50 have been witnessing some profit booking for the past two sessions. Following a flat close in the previous session, both indices were in the red around noon on Wednesday, March 26.

Indian stock market has seen a remarkable rebound in March after witnessing significant losses since October last year due to weak earnings, stretched valuations and massive foreign capital outflow.

With most negatives already priced in and signs of economic growth momentum returning, foreign investors began buying Indian equities in the cash segment last week.

From March 20 to March 25, foreign portfolio investors (FPIs) bought Indian stocks worth over ₹19,000 crore in the cash segment.

Why is Indian stock market falling?

Indian stock market is trading lower because of profit booking amid lingering uncertainty over the impact of US President Donald Trump’s tariff policy.

There are also anticipations that the earnings of Indian corporates may come on a softer side for Q4FY25 also.

Another factor is the renewed concern that the ‘buy China, sell India’ trend could resurface, and foreign investors may again start selling Indian equities due to the cheaper valuations of Chinese stocks.

According to a Bloomberg report, “Morgan Stanley strategists raised their outlook for Chinese stocks for the second time in a little more than a month, citing upside for valuations amid an improving outlook for earnings.”

What lies ahead for the Indian stock market?

Experts believe the China factor is unlikely to affect the Indian stock market significantly this time as the Chinese economy is struggling with structural issues.

There could be a tactical play of selling Indian stocks and buying their Chinese counterparts, but the medium—to long-term outlook of the domestic market remains positive, which will keep attracting foreign investors.

“Over the past four years, the ‘buy China, sell India’ trend has surfaced multiple times. Each time, it becomes a tactical trade but is eventually abandoned. China’s domestic challenges remain significant,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited.

G Chokkalingam, the founder and head of research at Equinomics Research Private Limited, also believes the Indian stock market has already experienced the impact of capital shifting to China.

Chokkalingam underscored that China faces the looming risk of a trade war with the US, which could significantly impact its economy.

“I don’t see the likelihood of another significant round of punishment by FPIs. In terms of the magnitude of the impact of the US trade war, China would be the most affected economy, given its $361 billion trade surplus with the US. Therefore, a heavy FPI outflow from India seems unlikely at this point. It is not logical to expect India to be more affected by the trade war than China. Consequently, one cannot be fundamentally more bullish on the Chinese markets,” said Chokkalingam.

Experts believe most of the negatives about the Indian stock market are discounted. Investors are focussing on earnings revival from Q1FY25 and expect a moderate impact of the Trump tariff on the Indian economy.

“While Q4 earnings may remain soft, an improvement is expected from Q1FY26 as the economy continues to show signs of recovery. Both earnings growth and the trade war’s impact appear to be largely priced in. However, the real concerns are a potential sharp rise in crude oil prices and the risk of a failed monsoon,” said Chokkalingam.

“Inflation has fallen below 4 per cent, increasing the likelihood of an RBI rate cut in April. The fiscal stimulus announced in Budget 2025, including over ₹1 lakh crore in tax relief and monetary support, is expected to sustain economic growth. There are clear signs of economic momentum, with GDP growth of 6.5 per cent and double-digit earnings growth in FY26 well within reach,” Vijayakumar said.

Vijayakumar believes the ongoing negotiations between India and the US could lead to positive developments, and there is a possibility that Trump may ease reciprocal tariffs, which would be a favourable outcome for the Indian stock market.

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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.