Investor sentiment improved on Monday amid cooling inflation, falling crude oil prices and renewed hopes that India’s ongoing trade talks with the US could lead to a favourable outcome.
US markets ended higher on Monday on optimism that President Donald Trump might soften his stance on tariffs. However, Asian markets remained cautious. The Indian government expressed hope that the trade discussions in Washington, which began yesterday, could pave the way for an interim deal—though markets responded with restrained optimism.
The sharp drop in crude oil prices to near $69 a barrel provided relief for India, but corporate earnings continue to disappoint. The steep fall in inflation has also raised expectations of a potential interest rate cut.
Gift Nifty closed at 25,171 on Monday night before slipping to 25,146 in early trade on Tuesday, indicating a likely soft opening for domestic markets.
European markets, except London, closed in the red on Monday. Shocked by Trump’s announcement of 30 percent tariffs on EU imports, European indices opened sharply lower but trimmed losses by the close. Market sentiment was buoyed by signs that EU trade ministers were presenting a united front and that Trump may be open to negotiation. The UK’s FTSE index rose to a record 8,998.06, buoyed by progress towards a 10 percent tariff arrangement.
US indices ended slightly higher. The Dow Jones rose 88.14 points (0.20 percent) to 44,459.65. The S&P 500 gained 8.81 points (0.14 percent) to close at 6,268.56, while the Nasdaq Composite advanced 54.80 points (0.27 percent) to 20,640.33.
US futures were slightly lower in early Tuesday trade: Dow down 0.14 percent, S&P 500 down 0.14 percent, and Nasdaq down 0.13 percent.
Markets are now focused on quarterly earnings from major US banks starting this week. JP Morgan Chase, Citigroup, Goldman Sachs, Morgan Stanley, Bank of America and Wells Fargo are all set to announce results. Analysts expect S&P 500 companies to post a 4.8 percent year-on-year increase in earnings for Q2—the slowest pace since Q4 2023. With indices near record highs, many anticipate a pullback in valuations.
Asian markets opened lower but turned positive. Japan’s Nikkei rose 0.25 percent, Hong Kong gained 1 percent, and Chinese markets also opened higher. China’s second-quarter GDP data is due today, with expectations of growth exceeding 5 percent.
The Indian market narrowed early losses on the back of cooling wholesale inflation and optimism around trade talks. However, it ended in the red for the fourth straight session. Continued selling by foreign investors in IT stocks dragged down benchmarks, while mid cap and small cap indices outperformed.
Wholesale inflation turning negative provided relief, especially to realty and related sectors. Realty was the top gainer on Monday.
The Nifty fell to an intraday low of 25,001 before recovering slightly to close at 25,082.30, down 67.55 points (0.27 percent). The Sensex dropped 247.01 points (0.30 percent) to settle at 82,253.46. Bank Nifty edged up 10.65 points (0.02 percent) to 56,765.35. The Nifty Midcap 100 index jumped 410.35 points (0.70 percent) to 59,052.55, while the Smallcap 100 rose 191.50 points (1.02 percent) to 18,954.95.
Market breadth remained negative, though the gap narrowed. On the BSE, 2,012 stocks advanced while 2,188 declined. On the NSE, 1,461 shares gained and 1,479 fell.
At the NSE, 80 stocks hit 52-week highs, while 36 reached 52-week lows. As many as 94 stocks hit upper circuits, and 73 hit lower circuits.
Foreign investors sold ₹1,614.32 crore worth of equities in the cash market on Monday, while domestic institutions bought ₹1,787.68 crore.
Technical indicators remain weak, with the Nifty below short-term moving averages. A firm move above the 25,100–25,200 zone is needed to resume upward momentum. A fall below 25,000 could test support at 24,800–24,900. Key support levels today are at 25,020 and 24,985, with resistance at 25,130 and 25,230.
Despite posting a halved revenue and steep losses, Ola Electric shares surged 18 percent on news that it would stop using rare earth materials in its vehicles.
HCL Technologies reported a drop in profit and expects margin pressures to persist, though revenue growth prospects offered some reassurance. The company said business weakness remains.
Jane Street paid the SEBI-imposed penalty in connection with a derivatives trading violation. The trading ban is expected to be lifted.
India’s retail inflation in June eased more than expected, hitting a 77-month low. Headline CPI fell to 2.10 percent from 2.82 percent in May. Food prices dropped 1.06 percent, with vegetables, pulses, cereals, milk, sugar, fish and meat becoming cheaper. Analysts expect the downward trend in food prices to continue, aided by a good monsoon and timely harvests.
However, core inflation (excluding food and fuel) rose to 4.6 percent, the highest in 21 months. Rising prices of gold and silver contributed to the spike, reflecting underlying price pressures.
Economists believe the Reserve Bank of India may lower its FY26 retail inflation forecast from 3.7 percent. Some even expect it to fall to 3 percent. This data could strengthen the case for a 25 basis point repo rate cut in October.
Wholesale inflation turned negative for the first time since October 2023, falling to –0.13 percent in June from 0.39 percent in May. Food items declined 3.75 percent, and combined food products fell 0.3 percent. Crude oil and natural gas prices dropped 12.3 percent, helping ease cost pressures.
Volatility in trade policy affected gold prices. Gold rose to $3,372 per ounce in early trade on Monday before falling sharply to $3,344.10 by close, down $12.78 from the previous session. In Asia this morning, gold recovered to $3,349.
In Kerala, gold rose ₹120 on Monday to ₹73,240 per sovereign. The gain was mainly due to the weak rupee rather than international price moves. Silver dropped to $38.09 per ounce.
In the global rubber market, prices dropped 0.42 percent to 165.60 cents per kg. Cocoa gained 1.35 percent to $8,287 per tonne, while coffee surged 5.93 percent. Palm oil prices were unchanged.
The US dollar index closed higher at 98.08 and edged up to 98.10 in early Tuesday trade. The euro fell to $1.1668, the pound to $1.343, and the yen weakened to 147.68 per dollar. US 10-year Treasury yields rose to 4.433 percent.
The rupee weakened on Monday, opening at 86 per dollar and closing at 85.98 after touching an intraday high of 86.03. It had ended the previous session at 85.80. The Chinese yuan strengthened to 7.17 per dollar.
Crude oil prices resumed their decline. Brent fell below $69, down three percent. In early Tuesday trade, Brent edged up to $69.09, WTI stood at $66.82, and Murban crude at $70.55. Natural gas prices fell by half a percent.
Bitcoin corrected from $122,540 to $119,250, while Ether dropped from $3,064 to $2,985.
