Indian Markets Open Lower as Weakness in Metals and IT Stocks Offsets Growth Optimism

As of 9:25 a.m. IST on Monday, the Nifty 50 had slipped 0.82 per cent to 24,554.05, while the BSE Sensex dropped 0.89 per cent to 80,729.25.

Market Update at 10:20 AM: Indian equity markets began the week on a weaker note, with declines in metal and IT stocks outweighing the positive sentiment from strong domestic GDP data. As of 9:25 a.m. IST on Monday, the Nifty 50 had slipped 0.82 per cent to 24,554.05, while the BSE Sensex dropped 0.89 per cent to 80,729.25.

Investor concerns were reignited globally after former U.S. President Donald Trump announced a potential hike in tariffs on imported steel and aluminium to 50 per cent, effective June 4. This triggered a sharp reaction in metal stocks, with the Nifty Metal index falling by 1.4 per cent, marking the steepest sectoral decline. IT stocks, with significant exposure to U.S. markets, also took a hit, falling 1.25 per cent.

Overall market sentiment remained subdued, as 10 out of 13 major sectoral indices traded in negative territory. Both Small-Cap and Mid-Cap indices registered a 0.3 per cent decline. These declines came despite encouraging economic data released on Friday, which showed India's GDP grew by 7.4 per cent in the January–March quarter, primarily supported by strong performance in the construction and manufacturing sectors.

Pre-Market Update at 8:00 AM: Indian equity markets are expected to kick off the trading week on a strong note, with the GIFT Nifty indicating a slightly positive opening. As of 7:21 am on Monday, June 2, the GIFT Nifty hovered around 24,851, marking a 15-point rise from the previous session’s close. However, sentiment across Asian markets turned cautious, taking cues from the decline in US stock futures. This pullback comes after a robust May where the S&P 500 and Nasdaq posted their highest monthly gains since November 2023.

In the week ahead, investors are likely to track multiple domestic and global developments. These include the Reserve Bank of India’s Monetary Policy Committee (MPC) decision, foreign capital flows, trade cues, automobile sales figures, and major economic data.

India's economy grew by 7.4 per cent during the January–March quarter of FY25, slowing from 8.4 per cent during the same period last year. This contributed to a full-year GDP growth of 6.5 per cent for FY25.

On the fiscal side, the government recorded a deficit of Rs 15.77 lakh crore for FY25, slightly above the target of Rs 15.70 lakh crore but an improvement over the Rs 16.54 lakh crore shortfall in FY24. The government has projected a reduction in fiscal deficit to 4.8 per cent of GDP in FY25 and further to 4.4 per cent in FY26.

GST collections remained solid, with May reporting Rs 2.01 lakh crore—an increase of 16.4 per cent year-on-year. This follows the record Rs 2.37 lakh crore collected in April.

On May 30, Foreign Institutional Investors (FIIs) turned net sellers, pulling out Rs 6,449.74 crore from equities. Meanwhile, Domestic Institutional Investors (DIIs) remained net buyers, purchasing stocks worth Rs 9,095.91 crore. DIIs have been consistently buying over the past nine sessions, providing some support to the market.

Despite ending Friday in the red, both the Nifty 50 and Sensex posted monthly gains for May. The Nifty 50 closed 82.90 points lower at 24,750.70, while the Sensex dropped 182.01 points to 81,451.01. The Nifty gained 1.7 per cent in May, marking its third consecutive month of positive returns.

Asian equities opened lower on Monday amid global trade concerns after US President Donald Trump announced that steel import tariffs would double to 50 per cent, effective June 4. This development comes amid broader trade policy shifts and geopolitical uncertainty.

On Wall Street, Friday's session ended with mixed results. The Dow Jones rose marginally by 54.34 points to 42,270.07, while the S&P 500 edged down slightly by 0.48 points to 5,911.69. The Nasdaq dropped 62.11 points to settle at 19,113.77. For May, the S&P 500 gained 6.2 per cent, and the Nasdaq rose by 9.6 per cent.

US inflation data, as reflected in the Personal Consumption Expenditures (PCE) Price Index, showed a minimal 0.1 per cent rise in April. The annual increase was 2.1 per cent, down from 2.3 per cent in March. The core PCE index, excluding food and energy, also posted a 0.1 per cent uptick.

Crude oil saw notable gains driven by geopolitical tensions and trade concerns. A restrained production hike by OPEC added to the upward momentum. Brent crude rose by 2.09 per cent to USD 64.09 per barrel, while US WTI futures climbed 2.30 per cent to USD 62.19 per barrel.

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Disclaimer: The article is for informational purposes only and not investment advice.