Key gauges end lower on Monday

Indian equity benchmarks languished in negative territory for major part of the trading session and ended lower on Monday due to selling in IT and TECK stocks and a weak trend in global markets after rating downgrade of the US by Moody's Ratings.

Some of the important factors in today’s trade:

Proposed 5% US tax on remittances may hit Indian households, rupee: The Global Trade Research Initiative (GTRI) has said that a proposed 5 per cent US tax on remittances sent abroad by non-citizens is raising alarm in India as it may hit Indian households and the rupee. 

DGFT imposes port restriction on import of certain goods from Bangladesh to India: The Directorate General of Foreign Trade (DGFT), Ministry of Commerce and Industry, has imposed port restrictions on the import of certain goods such as readymade garments, processed food items etc., from Bangladesh to India. 

India's GDP growth projected at 6.9% in Q4, 6.3% in FY25: ICRA has projected India's GDP growth at 6.9 per cent in the quarter ended March 31, and at 6.3 per cent for the full 2024-25 fiscal, undershooting the National Statistics Office (NSO) estimates made in February. 

Rupee rises against Dollar: Indian rupee appreciated against the US dollar, on weak US dollar index and a decline in crude oil prices. Global investors were also cautious as global rating agency Moody's downgraded US investment grade rating, leading to a fall in dollar index.

Negative global sentiments: Asian markets settled mostly lower on Monday as Moody's slashed the credit rating of the U.S. by a notch to Aa1 from the highest triple-A rating, citing the government's massive budget deficit and high interest rates. European markets were trading lower as investors made cautious moves amid some concerns about global growth following a downward revision in U.S. credit rating. 

Finally, the BSE Sensex fell 271.17 points or 0.33% to 82,059.42 and the CNX Nifty was down by 74.35 points or 0.30% to 24,945.45.    

The BSE Sensex touched high and low of 82,424.10 and 81,964.57 respectively. There were 10 stocks advancing against 20 stocks declining on the index. 

The broader indices ended in green; the BSE Mid cap index rose 0.27%, while Small cap index was up by 0.75%.

The top gaining sectoral indices on the BSE were Realty up by 2.22%, Healthcare up by 0.58%, Utilities up by 0.42%, Auto up by 0.41% and Consumer Durables up by 0.38%, while IT down by 1.23%, TECK down by 1.07%, Energy down by 0.37%, Oil & Gas down by 0.32% and Telecom down by 0.24% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 1.27%, Bajaj Finance up by 0.95%, NTPC up by 0.58%, SBI up by 0.39% and HDFC Bank up by 0.26%. On the flip side, Eternal down by 3.15%, Infosys down by 1.92%, TCS down by 1.23%, Tech Mahindra down by 1.19% and Reliance Industries down by 1.03% were the top losers.

Meanwhile, economic think tank - the Global Trade Research Initiative (GTRI) has said that a proposed 5 per cent US tax on remittances sent abroad by non-citizens is raising alarm in India as it may hit Indian households and the rupee. The provision is part of a broader legislative package titled ‘The One Big Beautiful Bill’ introduced in the US House of Representatives on May 12. It targets international money transfers made by non-US citizens, including green card holders and temporary visa workers like those on H-1B or H-2A visas. The proposed levy will not be applicable to US citizens.

The GTRI said ‘The proposed US tax on remittances sent abroad by non-citizens is raising alarm in India, which stands to lose billions in annual foreign currency inflows if the plan becomes law’. For India, the stakes are high as the country received $120 billion in remittances in 2023-24, with nearly 28 per cent originating from the US. GTRI founder Ajay Srivastava said ‘A 5 per cent tax could significantly raise the cost of sending money home. A 10-15 per cent drop in remittance flows could result in a $12-18 billion shortfall for India annually.

He said that the loss would tighten the supply of US dollars in India's foreign exchange market, putting modest depreciation pressure on the rupee. He added ‘The Reserve Bank of India may be forced to intervene more frequently to stabilise the currency. The rupee could weaken by Rs 1-1.5 per US dollar if the remittance shock plays out fully.’ In states like Kerala, Uttar Pradesh, and Bihar, millions of families rely on remittances to cover essential expenses like education, healthcare, and housing.

Srivastava said that a sudden decline in these flows could hit household consumption hard, at a time when the Indian economy is already navigating global uncertainty and inflation pressures. By taxing the global capital flow, he said, the US could disrupt a key channel of global development financing, reduce household income in poorer nations, and weaken demand in economies already grappling with inequality and instability. The development assumes significance, as India has proposed at the World Trade Organization (WTO) to lower the cost of cross-border flow of capital or remittances.

The CNX Nifty traded in a range of 25,062.95 and 24,916.65. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Bajaj Auto up by 4.10%, Shriram Finance up by 1.85%, Power Grid Corporation up by 1.35%, Hero MotoCorp up by 0.89% and Bajaj Finance up by 0.88%. On the flip side, Eternal down by 3.06%, Grasim Industries down by 2.90%, Infosys down by 2.01%, Tata Consumer Product down by 1.54% and Dr. Reddy's Laboratories down by 1.23% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 48.01 points or 0.56% to 8,636.55, France’s CAC fell 59.01 points or 0.75% to 7,827.68 and Germany’s DAX lost 35.72 points or 0.15% to 23,731.71.

Asian markets settled mostly lower on Monday as Moody's downgrade of the US credit rating reinforced concern about the US sovereign bond market. Also weighing on the market were comments from US Treasury Secretary Scott Bessent that President Trump will impose tariffs at the rate he threatened last month on trading partners that do not negotiate in good faith. Japanese shares declined as the yen strengthened on expectations of a Bank of Japan interest rate hike. Meanwhile, China announced that it will impose up to 75% of anti dumping duties on plastic imports from the United States, European Union, Taiwan and Japan. Chinese markets ended unchanged after mixed economic data. Industrial output held up in April but retail sales and investment disappointed as firms and households turned more cautious due to the trade war, data showed.