Indian equity markets extended their losing streak to the fourth consecutive session as concerns over potential US economic actions against India dampened investor sentiment. The uncertainty surrounding new H-1B visa regulations announced by Donald Trump weighed heavily on market performance.

Market Performance

The NSE Nifty index fell 112 points (0.45%) to close at 25,056.00, while the BSE Sensex dropped 386 points (0.50%), ending the day at 81,715.00. Both benchmark indices have witnessed significant declines over the past four trading sessions, with the Nifty and Sensex losing 1.40% and 1.60% respectively.

H-1B Visa Impact

The market downturn was primarily triggered by Donald Trump's announcement of a $100,000 levy on new H-1B visa applications. This move is expected to have a notable impact on Indian IT companies, which are major beneficiaries of the H-1B visa program. However, analysts estimate that tier-1 IT companies may only see a 1-2% impact on their profits. Despite the relatively modest financial implications, the news has soured market sentiment, leading to widespread profit-taking.

Investor Activity

Foreign portfolio investors (FPIs) showed a cautious approach, selling shares worth ₹2,425.70 crore. In contrast, domestic institutional investors displayed confidence in the market, purchasing ₹1,211.70 crore worth of shares.

Market Context

The current market correction comes after a strong rally that saw the Nifty surge from 24,400.00 to 25,400.00 in just three weeks. This rapid ascent was fueled by robust GDP numbers and GST cuts, pushing momentum indicators into overbought territory.

Analyst Outlook

Market analysts view the ongoing correction as a short-term phenomenon within a broader uptrend. They anticipate support levels for the Nifty in the range of 24,500.00 to 24,800.00.

As the Indian equity markets navigate through these challenging times, investors and analysts alike will be closely monitoring developments in US-India economic relations and their potential impact on key sectors, particularly IT.

In a recent analysis of India's equity markets, investment expert Chakri Lokapriya highlighted several sectors presenting attractive opportunities for investors, while also noting challenges in certain areas.

Infrastructure Sector Shows Promise

The infrastructure sector, particularly construction equipment manufacturers, is emerging as a potential growth area. Companies like ACE and BEML are gaining attention for their in-house equipment manufacturing capabilities. Lokapriya suggests these firms could benefit from:

• Government support
• Potential inclusion in Production-Linked Incentive (PLI) schemes

This backing could significantly boost their competitiveness and market position.

Defence Manufacturing: An Emerging Opportunity

The defence manufacturing sector, especially in drone technology, is presenting new and exciting prospects. Key players entering this space include:

• Bharat Electronics
• Hindustan Aeronautics Limited (HAL)

Factors contributing to the sector's potential include:

• Increasing defence spending
• India's robust talent pool in technology and engineering

These elements combine to create a favorable environment for growth and innovation in defence manufacturing.

NBFCs: Strong Performance and Positive Outlook

Non-Banking Financial Companies (NBFCs) have demonstrated remarkable performance, with some stocks recording gains of over 80% year-to-date. Notable performers include:

Looking ahead, the NBFC sector could see further improvements:

• Expected interest rate declines may enhance margins
• Potential increase in loan volumes

These factors could contribute to sustained growth in the NBFC sector.

Life Insurance Sector: Navigating Challenges

While other sectors show promise, the life insurance industry faces headwinds:

• Weak pricing environment
• Intense competition

Despite GST cuts driving volumes, Lokapriya maintains a cautious stance on this sector. The combination of pricing pressures and competitive forces presents significant challenges for life insurance companies.

Conclusion

India's equity markets offer a mixed landscape of opportunities and challenges across various sectors. While infrastructure, defence manufacturing, and NBFCs present attractive prospects for growth, the life insurance sector faces hurdles. Investors may find selective opportunities by closely monitoring these sector-specific trends and company performances.

As always, it's crucial for investors to conduct thorough research and consider their risk tolerance before making investment decisions in these dynamic market conditions.