Indian equity markets commenced Thursday's trading session, June 12, 2025, on a weaker note, reflecting prevailing global uncertainties and specific sectoral pressures. The caution among investors was palpable, largely driven by the unresolved U.S.-China trade dynamics and its potential repercussions. Key benchmark indices, the BSE Sensex and NSE Nifty, both registered declines as market participants navigated the weekly expiry of Nifty 50 futures and options contracts.

The BSE Sensex experienced a notable drop of 179 points, or 0.22%, settling at 82,335. Similarly, the NSE Nifty 50 index slipped by 46 points, equivalent to a 0.21% decrease, to close at 25,088. A significant contributor to this downturn was the information technology (IT) sector. The Nifty IT index saw a decline of 0.7%, breaking its six-day winning streak. This pressure on IT stocks stemmed from investor reactions to a fragile U.S.-China trade truce, with concerns mounting over the limited scope of the agreement and its implications for the U.S.-reliant tech industry. Investor focus this week has remained on the U.S.-China negotiations, which reportedly concluded in a tentative agreement including easing Chinese export restrictions on rare earth minerals and improving access for Chinese students to U.S. universities, though clarity remains limited.

Despite the overall negative sentiment, some stocks and sectors showed resilience. On the 30-share Sensex, notable gainers included Asian Paints, Sun Pharma, Bajaj Finserv, Bharti Airtel, Bajaj Finance, and Reliance Industries, which posted gains ranging from 0.4% to 2.1%. The pharmaceutical sector emerged as a top performer, with the Nifty Pharma index climbing 1.2%. This rise was propelled by strong performances from companies like Ajanta Pharma, Sun Pharma, Mankind Pharma, and Dr. Reddy's Laboratories, whose shares advanced between 1% and 3.4%. Financial stocks also exhibited modest gains, with the Nifty Financial Services and Nifty Bank indices each rising by 0.2%. Heavyweights such as HDFC Bank and ICICI Bank contributed to this, advancing 0.4% and 0.3% respectively.

In terms of individual stock movements, One 97 Communications, the parent entity of Paytm, experienced a sharp decline. Its shares plummeted by as much as 10% following a clarification from the Finance Ministry, which dismissed reports suggesting the potential introduction of a merchant discount rate (MDR) on Unified Payments Interface (UPI) transactions.

Offering insights into the market conditions, Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, suggested that the recent flattish market trend is likely to persist in the near term due to a lack of significant positive catalysts. Dr. Vijayakumar highlighted the ongoing uncertainty surrounding the U.S.-China trade deal, noting the absence of official confirmation from China and President Trump's continued rhetoric on tariffs, including discussions of substantial tariffs on China and intentions to set universal tariffs for trade partners. He emphasized that "the tariff crisis is not yet over." Furthermore, he pointed to the spike in Brent crude oil prices to $70 per barrel, driven by heightened security risks in the Middle East, as a negative factor for India. This could adversely affect sectors like paints, adhesives, tyres, and aviation, while potentially benefiting oil exploration companies such as ONGC and Oil India.

The cautious sentiment was not confined to Indian markets. Global equities also retreated on Thursday as investors processed a softer-than-expected U.S. inflation report and the tenuous trade truce between Washington and Beijing. Escalating tensions in the Middle East and persistent tariff concerns further weighed on risk appetite. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped by 0.3%, while Japan’s Nikkei fell by 0.7%. Stock futures in the U.S. and Europe also indicated declines. In China, the blue-chip index eased by 0.37%, and Hong Kong’s Hang Seng index dropped by 0.74%. U.S. data released on Wednesday showed consumer prices rose less than anticipated in May, although inflation is projected to rise due to import tariffs. This prompted President Donald Trump to renew calls for a substantial Federal Reserve rate cut. Markets are currently pricing in a 70% probability of a quarter-point rate cut by September, although the Fed is expected to maintain current rates at its upcoming meeting. Amidst this uncertainty, gold prices saw an uptick due to safe-haven demand, with spot prices increasing by 0.5% to $3,370.29 per ounce.

Tracking institutional fund flows, Foreign Institutional Investors (FIIs) turned net sellers on June 11, divesting equities worth Rs 446 crore and snapping a three-day buying streak. Conversely, Domestic Institutional Investors (DIIs) continued their buying momentum, remaining net buyers for the 17th consecutive session with purchases amounting to Rs 1,585 crore.

Crude oil prices surged on Thursday, reaching their highest levels in over two months. This increase was attributed to growing concerns over potential supply disruptions following U.S. President Donald Trump's announcement regarding the relocation of American personnel from the Middle East amid escalating tensions with Iran. At 12:30 a.m. GMT, Brent crude futures were up 0.2% at $69.92 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 0.3% to trade at $68.37 a barrel.

In the currency market, the Indian rupee opened stronger against the U.S. dollar, appreciating by 0.1% to 85.4275 on Thursday. The rupee's strength was supported by a softer U.S. dollar, which weakened amid signs of a more conciliatory stance from President Trump on tariffs and increasing expectations of Federal Reserve rate cuts later in the year. The dollar index, which tracks the greenback's performance against a basket of six major currencies, slipped by 0.07% to 99.02 and was reported to be down 9% so far this year.

Overall, the Indian stock market on June 12, 2025, operated under a cloud of caution, heavily influenced by the performance of IT stocks, ongoing global trade uncertainties, and geopolitical developments. While certain sectors like pharmaceuticals and financials offered pockets of growth, the broader market sentiment remained subdued, awaiting clearer positive triggers for a decisive upward movement.