The Indian stock market started the first trading day of June on a pessimistic note, unable to withstand lackluster cues from Asian markets and fresh worries about US trade protectionism. Both the benchmark Nifty 50 and the BSE Sensex opened lower by 600 and 200 points respectively, with strong institution selling seen in all the sectors.
As of 9:30 AM IST, the Nifty 50 index was trading at 24,587.10, that’s a record fall of about 163.6 points or 0.66% from its close of 24,750.70. The index opened quite a bit lower and did not waste any time continuing to push lower in the first few minutes of trading, eventually breaking through 24,600.
The BSE Sensex followed suit in this pessimistic mood, starting the day at 80,879.49 compared to its previous close of 81,451.01. As of 9:30 AM IST, the 30-share benchmark was down 571.5 points or 0.70% at 80,879.5.
Global Factors Weighing on Sentiment Amid This Unprecedented Domestic Boom
Overall, the negative tone of the Indian market can be largely attributed to soft cues from Asia peers. All of the other major Asian indices opened in the red as markets reacted to the escalation of trade tensions yesterday when former US president Donald Trump indicated his intention to raise tariffs on imported steel by as much as 25%. This latest turn of events has stoked fears over the direction of global trade and its possible dire consequences on global economic growth, creating a risk-off flavor across the investment landscape.
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On Twitter over the weekend, Trump announced plans to increase tariffs on steel imports to 50 percent – a huge jump from the current 25 percent. This slightly hawkish surprise announcement has weighed heavily on market sentiment, more than offsetting even the most positive of domestic cues.
Markets Not Delighted with Domestic GDP Data
Even with 7.4% (annualized) Q4 FY25 GDP growth data released on Friday, which blew out expectations, Friday’s positive domestic factor couldn’t do much to lift market sentiment. It seems to us that investors are much more focused on the downward drag that global trade tensions could put on the overall economic outlook.
Sectoral Performance Extremely Deep in the Red
Nearly every sectoral index on the NSE was trading in the negative in early morning trade. As testimony from the Nifty IT, Nifty Auto, and Nifty Metal indices, some of the most negatively affected by runaway performance, scarcity of clear evidence indicating that potential IT trade restrictions on base sectors. The Nifty Bank and Nifty Financial Services indices were at the receiving end of heavy selling pressure.
Market outlook still wary
Market analysts believe that the good GDP data did set an encouraging tone. However, the stronger global headwinds returned especially over worries about trade, and still are ruling market sentiment today. The markets are likely to stay choppy in the short term, following developments on the trade front and any more global cues.
Here are the important support levels for the Nifty 50. All eyes will be on Nifty – if the index slips further, it may test the 24,500 level. Investors should continue to be mindful of risks and pay attention to what’s happening around the world.
In short, the Indian benchmark stock market opened around 800 points lower on Friday, dragged down by negative global signals due to renewed US tariff fears. Even with robust domestic GDP data, the bearish sentiment continued to dominate the day as most sectors traded in the red. Investors will be understandably hesitant and will continue to hang on to every word regarding the future of global trade to guide their next move.
