Markets trade flat in early deals after gap-down opening

Indian equity benchmarks made gap-down opening on the first trading session of the financial year 2025-26, ahead of U.S. reciprocal tariff announcements on its trading partners, which are due to be imposed on Wednesday, April 2. According to Trump, the tariffs will include all nations, not just a smaller group of 10 to 15 countries with the biggest trade imbalances. Soon, Sensex and Nifty trimmed most of their losses and are trading flat in early deals. Some support came in as Reserve Bank of India (RBI) report showed that India's foreign exchange reserves rose $4.529 billion to $658.800 billion in the week that ended on March 21, extending gains for the third straight week. However, there was some cautiousness in the markets as the government data showed that the output of eight key infrastructure sectors slowed down to a five-month low of 2.9 per cent in February, as against 7.1 per cent growth registered a year ago.

On the global front, Asian markets are trading mostly higher, following the mixed cues from Wall Street overnight, as traders remain cautious ahead of U.S. reciprocal tariff announcements on its trading partners, primarily the 25 percent tariffs on auto and auto parts imports, which are set to be imposed on Wednesday. Some traders also picked up stocks at a bargain after heavy selling in the previous sessions. The manufacturing sector in Japan continued to contract in March, and at a faster pace, the latest survey from Jibun Bank revealed on Tuesday with a manufacturing PMI score of 48.4. Malaysia and Indonesia remain closed for Eid-ul-Fitr holidays.

Back home, auto stocks were in focus reacting to their monthly sales numbers. stock specific developments, Hindustan Aeronautics (HAL) traded jubilantly after the Ministry of Defence (MoD) signed two major contracts with HAL. These contracts involve the supply of 156 Light Combat Helicopters (LCH), Prachand, valued at Rs 62,700 crore (excluding taxes).

The BSE Sensex is currently trading at 77351.67, down by 63.25 points or 0.08% after trading in a range of 76775.79 and 77487.05. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.35%, while Small cap index was up by 0.85%.

The top gaining sectoral indices on the BSE were Telecom up by 3.45%, Auto up by 1.08%, Oil & Gas up by 1.03%, PSU up by 0.91% and Consumer Discretionary up by 0.82%, while IT down by 1.14%, Realty down by 0.87%, TECK down by 0.40%, Consumer Durables down by 0.13%, Bankex down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 5.07%, Mahindra & Mahindra up by 1.69%, Power Grid up by 1.69%, Adani Ports & SEZ up by 1.60% and Bharti Airtel up by 1.52%. On the flip side, Infosys down by 1.92%, TCS down by 1.22%, HDFC Bank down by 1.07%, HCL Technologies down by 1.03% and Axis Bank down by 0.82% were the top losers.

Meanwhile, Care Edge Ratings has asserted that the Reserve Bank of India’s (RBI) monetary policy committee is expected to shift its focus from concerns around inflation to supporting growth in its next review meeting in early April. The rating agency in a report said the monetary policy committee will go for another 25-basis-point reduction in the repo rate at April 7-9 meeting. It also anticipates RBI to maintain a ‘neutral’ stance amidst global headwinds.

The report said ‘We expect the policy statement to have a dovish undertone, even while remaining cautious about global developments’. The upcoming monetary policy meeting in April takes place amid a significant moderation in headline inflation over recent months, aided by lower food inflation. In February, the RBI unanimously lowered the repo rate by 25 basis points from 6.5 per cent to 6.25 per cent, in what was the first rate cut in about 5 years since Covid.

According to Care Edge, inflation is expected to remain closer to the RBI’s 4 per cent target over the next three quarters. Retail inflation fell to 3.6 per cent in February, marking the lowest level in seven months. The sustained decline in food and beverage inflation contributed to this lower inflation rate. Inflation in the food and beverages category decreased to 3.8 per cent in February, down from a peak of 9.7 per cent in October 2025, marking the lowest figure since May 2023. Vegetable inflation is also under control.

It noted ‘Falling inflation will provide the RBI with the necessary flexibility to prioritize growth concerns’. While India’s economic growth momentum rebounded in Q3 FY25, with a 6.2 per cent growth rate, up from 5.6 per cent in Q2 2024-25, it remains below potential. Moreover, external factors such as global policy uncertainty, risks from reciprocal tariffs, slower global growth, and geopolitical tensions will continue to pose challenges to domestic growth momentum. 

With food inflation moderating and core inflation under control, the RBI could overlook concerns around imported inflation in midst of the global trade war. RBI will also take cue from global developments, for instance if the Fed cuts rates to support its economy, the pressure on Indian rupee may ease, giving the RBI more room for further rate cuts. Overall, Care Edge said both global and Indian markets are expected to remain volatile till trade policy uncertainty remains elevated.

The CNX Nifty is currently trading at 23526.05, up by 6.70 points or 0.03% after trading in a range of 23339.10 and 23565.15. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 5.09%, Trent up by 3.51%, Hero MotoCorp up by 2.29%, Mahindra & Mahindra up by 1.78% and Bajaj Auto up by 1.78%. On the flip side, Infosys down by 1.87%, Shriram Finance down by 1.59%, HCL Technologies down by 1.18%, TCS down by 1.17% and HDFC Bank down by 1.03% were the top losers.

Asian markets are trading mostly in green; Taiwan Weighted surged 515.32 points or 2.43% to 21,211.22, Hang Seng advanced 244.01 points or 1.04% to 23,363.59, KOSPI increased 42.00 points or 1.66% to 2,523.12, Shanghai Composite strengthened 19.56 points or 0.58% to 3,355.31 and Nikkei 225 added 13.75 points or 0.04% to 35,631.31, while Straits Times was down by 7.86 points or 0.2% to 3,964.57.