Markets open lower as investors lock in gains after Monday’s rally

Benchmark indices opened lower on Tuesday, pulling back from their stellar gains of the previous day as investors moved to book profits. The Sensex fell 687.44 points or 0.83 per cent to 81,742.46 after opening at 82,249.60, compared to the previous close of 82,429.90. The Nifty declined 155.75 points or 0.62 per cent to 24,768.95, slipping from its previous close of 24,924.70.

The market’s cautious opening follows Monday’s extraordinary rally, which saw the Nifty surge 916.70 points (3.82 per cent) to close at 24,924.70, marking its biggest single-day gain in four years. Yesterday’s rally was fueled by easing global trade tensions and de-escalation of geopolitical concerns between India and Pakistan.

“The market is expected to digest recent gains after yesterday’s stupendous rise,” said Devarsh Vakil, Head of Prime Research at HDFC Securities. “While we anticipate some consolidation, we expect continued buyer interest in mid-cap and small-cap stocks at lower levels.”

Global markets had provided a strong backdrop for domestic equities on Monday after the United States and China agreed to a 90-day pause on escalating tariffs. “The US and China agreed to substantially cut tariffs. The tariffs on China will fall to 30 per cent from 145 per cent, and China will likewise cut tariffs on U.S. goods to 10 per cent from 125 per cent for 90 days,” noted Vikas Jain, Head of Research at Reliance Securities.

This development triggered a global risk-on sentiment, with the Dow Jones Industrial Average closing higher by 1,161 points (2.81 per cent), the S&P 500 gaining 3.26 per cent, and the Nasdaq Composite surging 4.35 per cent on Monday. However, US index futures were marginally lower by 0.3 per cent ahead of key CPI data due today.

The strong market rally also coincided with continued buying by Foreign Institutional Investors (FIIs), who purchased equities worth ₹1,246 crore on Monday. Domestic Institutional Investors (DIIs) also remained net buyers with investments of ₹1,488 crore.

In the currency and bond markets, the US dollar index climbed above 100 for the first time in a month, and the US 10-year bond yield hit a one-month high of 4.5 per cent, which could be weighing on sentiment today.

Among sectoral performances, pharmaceutical stocks were showing strength in early trade. Dr. Reddy’s Laboratories led the gainers with a 3.51 per cent increase, followed by BEL (2.79 per cent), Sun Pharma (1.25 per cent), Apollo Hospitals (1.11 per cent), and Cipla (1.03 per cent).

“Expect volatility in pharma stocks after US President Donald Trump signed an executive order that aims to reduce high prescription drug prices, which may negatively impact domestic pharma prices,” Jain cautioned.

On the losing side, IT heavyweight Infosys declined 2.20 per cent, followed by Eternal (-2.17 per cent), Hindalco (-2.06 per cent), Power Grid (-2.01 per cent), and Kotak Mahindra Bank (-1.66 per cent).

The market’s technical indicators suggest a cautious approach in the near term. “For day traders, buying on intraday dips and selling on rallies would be the ideal strategy,” advised Shrikant Chouhan, Head of Equity Research at Kotak Securities. “On the higher side, 25,050–25,200 would be the key resistance areas, while 24,800-24,700 would be the first major support zone.”

In commodities, gold prices tumbled to a one-month low on diminished safe-haven demand. “Gold and silver faced strong selling pressure at the start of the week following the announcement of the US-China trade deal, which lifted global risk sentiment,” said Rahul Kalantri, VP Commodities at Mehta Equities Ltd. Gold fell nearly 3 per cent to around $3,220 an ounce.

Meanwhile, crude oil extended gains in a volatile session, with Brent crude rising 3 per cent to $65.80 a barrel, supported by the US-China trade agreement and easing geopolitical tensions.

Looking ahead, market participants will closely watch inflation data from both India and the US expected later today. Corporate earnings will also remain in focus, with heavyweight companies including Bharti Airtel, Tata Motors, GAIL India, and Cipla scheduled to announce their quarterly results.

“The de-escalation between India and Pakistan has improved the overall market sentiment,” noted VLA Ambala, Co-Founder of Stock Market Today. “This trend shows how resilient our market is in the face of major geopolitical uncertainties and global trade wars, reinforcing faith in India’s growth.”

Traders are advised to adopt a disciplined approach with strict risk management. Hardik Matalia, Derivative Analyst at Choice Broking, suggested that “considering prevailing global uncertainties, it is prudent to avoid large overnight positions and enforce tight risk controls.”

Published on May 13, 2025