CHENNAI: Indian equity markets staged a dramatic recovery on Monday, bouncing back sharply from deep intraday losses, although the benchmark indices still closed slightly in the red. The BSE Sensex ended 77 points, or 0.09 per cent, lower at 81,374 after plunging as much as 719 points to hit an intraday low of 80,654. The NSE Nifty50 mirrored the trend, closing at 24,717, down 34 points or 0.14 per cent, after rebounding from a low of 24,526.
The early sell-off was triggered by a combination of global and domestic headwinds. Market sentiment took a hit after former US President Donald Trump announced fresh 50 per cent tariffs on steel imports—doubling the previous rate—which are set to come into effect from June 4. The move stoked fears of a renewed trade war environment, especially impacting metal and export-oriented sectors.
Adding to the gloom were rising tensions between Russia and Ukraine, India’s growing Covid-19 caseload in certain regions, and continued uncertainty around foreign institutional investment (FII) flows. Investor caution also prevailed ahead of the Reserve Bank of India's (RBI’s) monetary policy decision due later this week, with expectations divided over the central bank’s tone on inflation and growth.
Despite the initial slump, selective buying in index heavyweights helped stem the fall. Stocks like Adani Ports, M&M, Eternal (Zomato), PowerGrid, HUL, Bajaj Finserv, ITC, ICICI Bank, Asian Paints, and Nestle India gained between 0.4 per cent and 2 per cent, supporting the recovery.
Broader markets outperformed the benchmarks, as investor interest shifted to mid- and small-cap counters. The Nifty MidCap and Nifty SmallCap indices ended higher by 0.62 per cent and 1.1 per cent, respectively, buoyed by stock-specific action and relative valuation comfort.
On the sectoral front, Nifty Metal and Nifty IT were the biggest laggards, each down 0.7 per cent, hurt by the tariff news and ongoing global uncertainty. In contrast, Nifty Realty and Nifty PSU Bank indices surged over 2 per cent each, benefiting from continued optimism around domestic economic recovery and credit growth.
Going forward, market participants are likely to keep a close watch on global cues, particularly developments in the US and Europe, as well as the RBI’s policy stance. Volatility may remain elevated as traders assess macroeconomic data and geopolitical developments.