Nifty and Sensex Decline After Post-Ceasefire Rally; All Eyes on Inflation

The Nifty 50 slipped 0.78 per cent to 24,734, while the BSE Sensex declined 0.96 per cent to 81,643 by 12:22 p.m. IST.

Market Update at 12:30 PM: India’s key stock indices opened lower on Tuesday as investors opted to lock in gains following a sharp rally in the previous session. The Nifty 50 slipped 0.78 per cent to 24,734, while the BSE Sensex declined 0.96 per cent to 81,643 by 12:22 p.m. IST.

Despite the overall decline, Small-Cap and Mid-Cap stocks showed resilience, with the Nifty Small-cap and Nifty Mid-cap indices rising 0.6 per cent and 0.75 per cent, respectively. Sectors such as defence and shipbuilding continued to gain on expectations of increased orders in the aftermath of the India-Pakistan tensions.

The market may enter a consolidation phase after Monday’s nearly 4 per cent surge driven by the announcement of a ceasefire and a cooling of geopolitical tensions. 

India had witnessed renewed foreign inflows in March, which gained momentum through April and May, reversing a trend of heavy selling since last September. Investors are now eyeing the April inflation numbers, which are scheduled for release post-market hours.

Meanwhile, pharma stocks stood out with a 1.6 per cent gain, supported by relief that a recent U.S. executive order on drug pricing was not as adverse as initially anticipated.

Market Update at 10:15 AM: India’s benchmark indices opened lower on Tuesday, pulling back after a strong rally the previous day that marked their best performance in over four years. The Nifty 50 declined by 0.52 per cent to 24,784.95, while the BSE Sensex fell 0.64 per cent to 81,900.2 as of 9:25 a.m. IST.

At the market open, eight out of the 13 key sectoral indices were trading in the red. However, broader market indices showed resilience, with both the Smallcap and Midcap gaining around 0.2 per cent each.

On Monday, markets had surged nearly 4 per cent in a broad relief rally after a ceasefire agreement between India and Pakistan eased geopolitical tensions. 

Global cues remain supportive, with improved investor sentiment after the U.S. and China agreed to ease trade tensions by suspending certain tariffs and seeking cooperation to avoid economic disruption.

Investor attention is now turning toward India’s inflation figures for April, scheduled for release after market hours today.

Pre-Market Update at 8:00 AM: Domestic equity benchmarks Sensex and Nifty 50 are expected to start Tuesday’s session on a quiet note after a significant rally in the previous trading session. 

The Gift Nifty, as of 07:20 am, hovered near the 24,920 level, reflecting a discount of about 155 points compared to the previous Nifty 50 close, indicating a likely negative start. However, positive cues from global markets, including progress on a US-China trade agreement and signs of de-escalation between India and Pakistan, may help retain some investor confidence.

Asian markets opened higher, mirroring the strong overnight performance of US indices. On Wall Street, the Dow Jones surged 1,160.72 points or 2.81 per cent to close at 42,410.10. The S&P 500 gained 184.28 points or 3.26 per cent to end at 5,844.19, while the Nasdaq Composite advanced 779.43 points or 4.35 per cent to finish at 18,708.34, driven by news of a temporary tariff reduction between the US and China.

On the geopolitical front, top military officials from India and Pakistan agreed to uphold the ceasefire and avoid hostile actions, contributing to improved sentiment in Indian markets. 

The previous day, the Sensex had surged 2,975 points to close at 82,429.90 and the Nifty rose 916 points to end at 24,924.70, marking their strongest single-day performance in four years. Factors such as the improving geopolitical situation, early monsoon forecasts, and progress in global trade talks supported the rally.

Today, key earnings results from Bharti Airtel, Tata Motors, GAIL India, Cipla, Siemens, Bharti Hexacom, Hero Motocorp, and Aditya Birla Capital are expected, which could lead to stock-specific movements. 

On May 12, Foreign Institutional Investors were net buyers with inflows of Rs 1,246.48 crore, while Domestic Institutional Investors bought shares worth Rs 1,448.37 crore. Despite this, FIIs ended a 16-session buying streak and remained net sellers in the preceding trading sessions.

In the commodities segment, gold prices held steady due to improved risk appetite, with spot gold trading around USD 3,235.37 per ounce. Crude oil prices eased slightly after recent gains. Brent crude fell 0.32 per cent to USD 64.75 per barrel and WTI crude slipped 0.31 per cent to USD 61.76. The US dollar continued its upward momentum after the trade deal, with the dollar index hovering near a one-month high at 101.67. 

US Treasury yields also moved higher, with the two-year yield at 3.9977 per cent and the ten-year benchmark at 4.4551 per cent.

For today, CDSL and Mannapuram Finance continue to remain under the F&O ban list.

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