Indian financial markets started June on a cautious footing, with equities, the rupee and precious metals responding to a mix of geopolitical tensions in West Asia, foreign fund outflows and concerns over rising crude oil prices. Although benchmark indices opened higher, they failed to hold on to early gains and ended the day in negative territory as investors remained risk-averse.
The BSE Sensex closed 508 points lower in the 74,300-74,500 range, while the NSE Nifty 50 slipped below the 23,400 level, extending the weakness witnessed toward the end of May. Selling was pronounced in financial, consumer and automobile stocks, while information technology counters provided some support amid optimism surrounding global technology demand. The broader market also remained under pressure, with mid-cap and small-cap stocks underperforming the benchmark indices.
"The equity markets on Monday witnessed another highly selective session, highlighting the widening gap between sector-specific opportunities and broader market sentiment," said Hariprasad K, a SEBI-registered Research Analyst and Founder at Livelong Wealth.
Hariprasad added that while the benchmark indices remained under pressure and Nifty extended its recent weakness, textile stocks emerged as one of the strongest outperformers following the government's decision to temporarily remove the 11% customs duty and AIDC on cotton imports until October 2026.
Investor sentiment continued to be shaped by foreign institutional investor outflows following the latest MSCI index rebalancing. At the same time, escalating tensions in West Asia and the resulting rise in crude oil prices renewed concerns over imported inflation, India's current account position and the impact of higher energy costs on corporate profitability.
"Energy markets responded sharply to the latest escalation. International crude oil prices climbed nearly 4% to trade above the $91 per barrel mark, while domestic crude futures surged more than 5% to approach Rs 8,700. The rebound reflects renewed concerns over supply disruptions and a reassessment of expectations for a near-term resolution to the ongoing energy crisis," says R Ponmudi, CEO at online trading and wealth tech firm Enrich Money.
The rupee experienced a volatile session before ending largely unchanged at around 94.99 against the US dollar. Initial gains supported by foreign portfolio inflows were offset by importer demand and hedging-related purchases of the greenback. Market participants also remained focused on the Reserve Bank of India's monetary policy review later this week, with expectations that the central bank will maintain a cautious approach amid inflationary pressures and currency-market volatility.
Bullion prices remained elevated as investors continued to favour safe-haven assets amid growing geopolitical uncertainty. Domestic 24-carat gold traded near Rs 1.57 lakh per 10 grams, while silver hovered around Rs 2.67 lakh per kilogram. Despite some intraday fluctuations, the broader trend in precious metals remained supported by global risk aversion and expectations of sustained central bank purchases.
Among sectoral performers, information technology emerged as a relative bright spot, aided by positive global technology cues. In contrast, banking, consumer goods and automobile stocks faced selling pressure amid concerns over growth, inflation and rural demand. Energy stocks traded mixed, with investors weighing the benefits of higher crude prices for upstream producers against the broader economic impact of rising input costs.
Looking ahead, investors will closely track developments in West Asia, movements in crude oil prices, foreign institutional investor flows and the Reserve Bank of India's policy decision. Any easing of geopolitical tensions could improve risk appetite, while sustained strength in oil prices may continue to weigh on market sentiment.