As global trade tensions escalate and crude oil prices retreat, Indian markets are now firmly focused on the Reserve Bank of India's (RBI) upcoming monetary policy review. The Monetary Policy Committee’s (MPC) meeting, which begins on Wednesday, will culminate on Friday when RBI Governor Sanjay Malhotra announces the committee's decisions.
Markets are widely expecting a repo rate cut of 25 basis points, with the State Bank of India (SBI) even anticipating a 50 basis point reduction. Given the slowdown in GDP growth to 6.5 percent last year, a rate cut is seen as a move to stimulate economic activity.
Goods and Services Tax (GST) collections for May crossed ₹2 lakh crore, although net tax revenue stood at ₹1.74 lakh crore after accounting for refunds. The uptick in revenue was primarily driven by increased import volumes.
Tensions in the global trade landscape are intensifying. US President Donald Trump announced steep new tariffs of 50 percent on steel and aluminium imports from Europe, set to take effect from July 9. Although the European Commission is in talks to defuse the situation, officials have warned of retaliatory tariffs if negotiations fail.
Trump also accused China of breaching previous agreements, stalling US-China trade talks. Reports suggest China may restrict rare earth mineral exports to American firms, a move that could further strain relations. A meeting between Trump and Chinese President Xi Jinping is expected in an effort to resolve the impasse.
Meanwhile, legal uncertainty around existing tariffs continues to roil markets, pushing gold higher and weakening the dollar.
OPEC and allied producers, including Russia, agreed on Friday to raise crude oil production from July by 4,11,000 barrels per day. This comes after years of output restraint, which began to ease in April. The decision has pushed prices down, with Brent at $63.90, WTI at $62.02, and Murban crude at $63.23 in early Monday trade.
Derivatives trading suggests a soft opening for Indian equities on Monday. GIFT Nifty closed at 24,897 on Friday night but dipped to 24,801 in early Monday trade before recovering. This indicates a likely negative start for the domestic market session.
European indices closed mixed on Friday. The French index fell while others gained marginally. The breakdown in US-China trade talks triggered caution.
In the US, the Dow Jones Industrial Average rose 54.34 points (0.13 percent) to end at 42,270.07. The S&P 100 closed marginally lower by 0.48 points (0.01 per cent) at 5,911.69, while the Nasdaq Composite fell 62.11 points (0.32 percent) to close at 19,113.77.
Asian markets also started Monday on a weak note. Japan’s Nikkei was down 1.25 per cent, and the Hang Seng Index in Hong Kong also traded lower. Chinese markets were closed for a holiday.
Indian equities remained gripped by uncertainty on Friday. After a volatile start, benchmark indices slipped further. Sectors including IT, metals, auto, FMCG, consumer durables, pharma, oil, and healthcare all ended lower.
The Nifty closed down 82.90 points (0.33 percent) at 24,750.70, while the Sensex lost 182.01 points (0.22 percent) to end at 81,451.01. However, Bank Nifty climbed 203.65 points (0.37 percent) to close at 55,749.70.
Midcap and smallcap indices were largely flat. The Nifty Midcap 100 declined 37.25 points (0.06 percent) to 57,420.00, and the Nifty Smallcap 100 dipped 6.10 points (0.03 percent) to 17,883.30.
Market breadth remained negative, with 1,814 stocks advancing and 2,181 declining on the BSE. On the NSE, 1,299 stocks rose while 1,581 fell. Notably, 64 stocks hit 52-week highs, while 23 touched new lows.
Foreign institutional investors (FIIs) sold equities worth ₹6,449.74 crore in the cash segment, while domestic institutional investors (DIIs) purchased shares worth ₹9,095.91 crore.
The Nifty attempted to breach the 25,000 mark but failed to hold gains, with support seen at 24,700. A break below this could take the index towards 24,450–24,500. Key resistance levels are placed at 24,835 and 24,925.
Gold prices fell more than 2 percent last week on a stronger dollar and easing trade concerns but rebounded nearly 1 per cent at the start of this week after renewed tariff threats from Trump.
Despite a minor uptick in US retail inflation, markets do not expect a rate cut at the Federal Reserve’s June 18 FOMC meeting.
Gold closed at $3,290.30 per ounce on Friday after breaching the $3,300 support. Early Monday trading saw it jump to $3,322 before easing to $3,310. In Kerala, gold rose ₹200 on Friday to ₹71,360 per sovereign.
Silver prices rose to $33.19 per ounce.
Rubber fell 2.53 per cent to 162 cents/kg in the global market. Cocoa plunged 6.5 per cent to $9,762.61 per tonne. Coffee and tea prices also softened.
The dollar index was volatile on Friday, closing at 99.33, up from the previous day’s 99.28. On Monday morning, it slipped to 99.24. The euro weakened to $1.1366, and the pound traded at $1.348. The yen weakened to 143.65 per dollar. US 10-year treasury yields rose to 4.42 per cent.
The rupee closed at 85.57 per dollar on Friday, down 7 paise. The Chinese yuan remained steady at 7.20 per dollar.
Cryptocurrencies continued to struggle. Bitcoin fell back to $104,000, and Ethereum dropped below $2,500, highlighting continued investor caution in digital assets.
