GIFT Nifty is down by 0.35%, markets may open gap down in the morning on Wednesday
Indian equity market session tomorrow will be full of caution as investors are confronted with a torrent of policy changes, international uncertainties, and technical pressures. The following are the highlights, focusing on the current GIFT Nifty reading, suggested amendments to the Securities Transaction Tax (STT), and the massive transformation of futures and options (F&O) weekly expiries, in addition to the ever-present overhang of Trump's tariffs.
GIFT Nifty futures are lower by 0.35% at 24,654, hinting at a weak start to Indian stocks[1]. This comes after recent lacklustre performance of Asian and U.S. markets, consistent with widespread global risk aversion. As GIFT Nifty remains below the resistance of 25,000 and crucial technical support around 24,600, the way ahead is expected to be choppy, particularly as foreign investors have become net sellers.
Reports suggest that the Securities Transaction Tax could be increased soon, a measure which will help cut down speculation in the options segment. An increase in STT would raise the cost of transactions for all participants in the market, particularly high-frequency and derivatives players. Previous STT hikes usually resulted in reduced trading volumes in the near term, as players adjusted strategies and risk-taking.
Compounding the uncertainty, significant news emerged today that India's regulator SEBI is mulling eliminating weekly expiry contracts on all F&O indices—the Nifty 50 among them. Just last year, SEBI restricted weekly expiries to a single flagship index per bourse; now an even more drastic step seems to be in the works: converting F&O contracts to either bi-monthly or monthly expiries.
This possible reform would seek to cool excessive short-term speculation and shrink expiry-day-induced volatility in the options market, where an astonishing 93% of retail traders presently make losses. Market stocks with exposure to capital market revenues, including BSE and broking houses, plummeted on the news, also capturing the anticipated decline in F&O revenue and trading volumes.
Indian ADRs in the U.S. such as Infosys, ICICI Bank, and Tata Motors have posted mixed numbers with a downward bias, reflecting the nervousness in international markets. Sentiment on these ADRs continues to be muted, with more caution prior to releases of U.S. macroeconomic data. Analysts anticipate volatility to continue until policy clarity and global cues firm up.
At the same time, the specter of resumed American tariffs under Donald Trump—particularly on India's Russian oil transactions—still looms over Indian export-based industries[6][7][8]. Textile, chemical, and pharmaceutical industries may see their margins get pinched, and this may hurt GDP growth and the rupee's stability.
Tomorrow's session is in for disruption: GIFT Nifty is predicting a weak opening, STT hike speculation and upcoming F&O expiry reforms with volumes, and Trump-era tariff worries persist. Defensive sectors should lead the pack, while high-beta stocks and F&O-thick counters remain under stress. Anything but policy clarity and risk-on global mood can trigger sustainable relief.
