Sensex falls over 200 points led by FMCG, IT stocks; Nifty below 25,750

After opening on a positive note, Indian equities slipped into the red territory on Tuesday. The gains from the optimism surrouding U.S. trade developments were reversed by the losses in FMCG and IT stocks.

By 9:30 a.m., the Sensex had reversed course, falling 200 points, or 0.23%, to 83678.17, while the Nifty 50 went past the 25,700 level, as investors turned cautious after the opening uptick.

On the 30-stock Sensex, gains were led by Eternal, Tech Mahindra, State Bank of India, Bharat Electronics, HDFC Bank and Titan, with the shares advancing between 0.4% and 3%.

IT stocks outperformed, with the index rising 0.6%. Tata Consultancy Services edged up 0.2% and HCL Technologies climbed 1% after both companies reported a modest revenue beat for the December quarter.

The advance was broad-based, with small-cap and mid-cap indices each adding about 0.4%.

In the previous session, both the Sensex and the Nifty rose roughly 0.4% as expectations built that India-U.S. trade negotiations could regain momentum, following comments from a U.S. envoy indicating the two sides were set to discuss trade issues in a call later in the day.

"Apart from targeting other countries, Trump is also targeting those who don’t toe his line at home. The charges levelled against the Fed chief, Jerome Powell, are an example of the fact that Trump will go against anyone who doesn’t fall in line. This unprecedented, unstable, unpredictable behaviour of the US president will continue to weigh on markets. From the Indian market perspective, the necessity of a US-India trade agreement was evident yesterday when the market bounced back sharply when the US ambassador Sergio Gor declared that the US is determined to have a trade agreement with India and the talks will resume as early as January 13th," said Vijayakumar, adding that in the near-term, Q3 results will witness stock-specific action.

Asian equities advanced on Tuesday, led by a powerful rally in Japanese stocks as investor enthusiasm for artificial intelligence continued to buoy risk assets. At the same time, concerns about the Federal Reserve’s independence underpinned demand for gold, even as those worries weighed on the U.S. dollar.

In equity markets, Japan’s Nikkei 225 surged 3.4% after returning from a holiday, lifting the index to a record high. The move was supported by a weaker yen and renewed speculation about fiscal stimulus. Stock markets in South Korea and Taiwan also touched all-time highs, while Chinese blue-chip shares climbed to their strongest level in four years.

MSCI’s broad index of Asia-Pacific shares outside Japan rose 0.8%, reaching a new record.

European equity futures pointed to a subdued open. Futures on the Euro Stoxx 50 edged up 0.2%, Germany’s DAX added 0.1%, and London’s FTSE futures were little changed.

U.S. equity futures were modestly lower ahead of a closely watched December inflation report. S&P 500 futures slipped 0.2%, while Nasdaq futures fell 0.3%. Economists expect core consumer prices to show annual inflation ticking up to 2.7%, though Goldman Sachs forecasts a slightly firmer 2.8% reading.

Brent crude futures rose 28 cents, or 0.4%, to $64.15 a barrel by 0101 GMT, trading near a two-month high reached in the previous session. The gains reflected a market weighing geopolitical risk against the prospect of additional barrels returning to global supply.

The dollar index, which tracks the U.S. currency against a basket of six major peers, was up 0.11% at 98.73, underscoring the broader strength of the greenback.