Indices cool off after Monday surge; Nifty slips below 24,600

The domestic equity benchmarks took a breather on Tuesday, halting their previous session's rally. A spike in U.S. Treasury yields and crude oil prices triggered a wave of profit booking, reflecting a cautious tone among investors despite easing geopolitical tensions and relatively stable global cues.

Globally, sentiment brightened after the U.S. and China agreed to lower tariffs and enhance economic cooperation, a move that would typically lift emerging markets. But for India, the news was met with mixed reactions. Investors had earlier pinned hopes on prolonged US-China tensions leading global manufacturers to diversify supply chains toward India. With that tension easing, the China-plus-one tailwind seems to be fading'at least for now.

Back on Dalal Street, the Nifty closed below the 24,600 mark, dragged down by IT, FMCG, and auto stocks. On the flip side, PSU banks, pharma, and defense stocks showed resilience, managing to close in the green.

The S&P BSE Sensex tanked 1,281.68 points or 1.55% to 81,148.22. The Nifty 50 index slumped 346.35 points or 1.39% to 24,578.35.

Infosys (down 3.54%), HDFC Bank (down 1.76%), Reliance Industries (down 1.42%) and ICICI Bank (down 1.28%) were major drags.

The broader market outperformed the frontline indices. The S&P BSE Mid-Cap index rose 0.17% and the S&P BSE Small-Cap index gained 0.99%.

The market breadth was strong. On the BSE, 2559 shares rose and 1402 shares fell. A total of 140 shares were unchanged.

The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, fell 1.04% to 18.20.

Economy:

India's retail inflation in April fell to 3.16% from 3.34% in March, showed official data released by the Ministry of Statistics and Programme Implementation on Tuesday. Effectively, headline inflation declined 18 basis points in April 2025 compared to March 2025. According to the government, it is the lowest year-on-year inflation since July 2019. The decline in headline inflation in April 2025 is mainly attributed to decline in inflation of vegetables, pulses & products, fruits, meat and fish, personal care and effects and cereals and products.

Numbers to Track:

The yield on India's 10-year benchmark federal paper rose 0.35% to 6.392, compared with the previous close of 6.370.

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 85.3000, compared with its close of 85.3600 during the previous trading session.

MCX Gold futures for the 5 June 2025 settlement gained 1.25% to Rs 94,061.

The US Dollar Index (DXY), which tracks the greenback's value against a basket of currencies, was down 0.19% to 101.40.

The United States 10-year bond yield shed 0.13% to 4.451.

In the commodities market, Brent crude for June 2025 settlement gained 35 cents or 0.54% to $65.31 a barrel.

Global Markets:

European shares advanced on Tuesday as investors awaited earnings from Tata Motors, Nissan, Honda, Metro Bank, and Bayer. Key data releases include U.K. retail sales and Germany's ZEW economic sentiment survey.

The U.K. unemployment rate hit 4.5% in the January to March period, hitting the highest rate since August 2021. Vacancies dropped by 42,000 across February to April, falling for the 34th consecutive quarter.

Asian stocks ended higher, following a massive rally on Wall Street after the U.S. and China agreed to a trade deal, which includes a 90-day pause on new tariffs and a reduction in reciprocal tariffs by 115 percentage points.

In the U.S., major indices posted significant gains. The Dow Jones Industrial Average rose 2.81%, the S&P 500 advanced 3.26%, and the Nasdaq Composite gained 4.35%, with technology stocks ' particularly those with exposure to China, such as Apple and Tesla ' leading the way.

The surge in investor confidence followed a joint announcement on Monday that the U.S. and China had agreed to mutually reduce tariffs on each other's goods for an initial 90-day period. Under the agreement, the U.S. will reduce its tariffs on Chinese imports from 145% to 30%, while China will lower its retaliatory tariffs from 125% to 10%. China also committed to easing certain non-tariff measures, including restrictions on rare earth exports.

The agreement was the result of intensive negotiations held over the weekend in Geneva, where both sides reported substantial progress. A joint statement emphasized the importance of developing a sustainable, long-term, and mutually beneficial economic and trade relationship.

This development marks a significant de-escalation in the prolonged trade conflict that began with the imposition of sweeping tariffs by the United States. The trade tensions had previously disrupted global supply chains, heightened market volatility, and raised concerns over a potential global recession.

However, despite the positive momentum, investor focus is now shifting toward upcoming U.S. inflation data, with the Consumer Price Index (CPI) report due later Tuesday.

Stocks in Spotlight:

Hero Motocorp added 1.81% after the company's standalone net profit increased 6.39% to Rs 1,080.94 crore on a 4.41% jump in revenue from operations to Rs 9,938.65 crore in Q4 FY25 over Q4 FY24.

IIFL Finance jumped 4.47% to Rs 405.75 after a foreign brokerage upgraded the stock to 'Buy', hiking its target price to Rs 550 per share'a sharp jump from its earlier target of Rs 380.

Swiggy fell 3.14% as the mandatory six-month lock-in period for pre-IPO investors came to an end on 12 May 2025.

Aarti Surfactants hit an upper circuit of 10% after the company's consolidated net profit zoomed 109.03% to Rs 9.72 crore in Q4 FY25 as against Rs 4.65 crore posted in Q4 FY24. Revenue from operations surged 27.43% year on year to Rs 202.05 crore in the quarter ended 31 March 2025.

Tata Steel fell 1.35%. The company reported a 116.54% surge in consolidated net profit to Rs 1,200.88 crore in Q4 FY25 compared with Rs 554.56 crore posted in Q4 FY24. However, revenue from operations fell 4.20% YoY to Rs 56,218.11 crore in the quarter ended 31 March 2025.

Patel Engineering declined 5% after the company's consolidated net profit tanked 73.41% to Rs 32.80 crore in Q4 FY25 as against Rs 123.37 crore posted in Q4 FY24. Revenue from operations was at Rs 1,611.9 crore in Q4 FY25, marking a growth of 20% YoY compared to Rs 1,343.2 crore recorded in Q4 FY24.

Advait Energy Transitions jumped 4.33% after the company's consolidated net profit surged 78.14% to Rs 12.88 crore in Q4 FY25 as against Rs 7.23 crore posted in Q4 FY24. Revenue from operations zoomed 255.91% year on year to Rs 194.67 crore in the quarter ended 31 March 2025.

Chalet Hotels rose 0.92%. The company's consolidated net profit jumped 50.2% to Rs 123.85 crore on a 24.8% increase in revenue from operations to Rs 521.97 crore in Q4 FY25 over Q4 FY24.

Zaggle Prepaid Ocean Services advanced 4.58% after the company's standalone net profit climbed 66.8% to Rs 31.96 crore on a 50.5% increase in revenue from operations to Rs 411.45 crore in Q4 FY25 over Q4 FY24.

Dynamic Cables hit an upper circuit limit of 20% after the company's net profit rose 71.09% to Rs 23.56 crore on a 37.41% increase in net sales to Rs 331.17 crore in Q4 March 2025 over Q4 March 2024.

CARE Ratings zoomed 13.06% after the ratings agency's consolidated net profit rallied 76.93% to Rs 42.60 crore on a 21.64% increase in revenue from operations to Rs 109.65 crore in Q4 FY25 over Q4 FY24.

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