Markets open lower amid Trump-Musk spat and RBI policy expectations 

Markets opened on a cautious note Friday morning as the Sensex fell 248.45 points to 81,193.59 and the Nifty declined 62.30 points to 24,688.60, with investors weighing global uncertainties against expectations of a domestic rate cut. The benchmark indices reflected a 0.31 per cent and 0.25 per cent decline, respectively, at 9.40 AM.

The morning session was marked by mixed trading patterns across sectors, with Coal India leading gainers at 1.18 per cent to ₹399.55, followed by Dr. Reddy’s Laboratories up 1.01 per cent at ₹1,303.60. IndusInd Bank gained 0.64 per cent to ₹808.35, while Tata Steel and JSW Steel posted modest gains of 0.55 per cent and 0.52 per cent respectively.

On the losing side, Tata Motors declined 1.03 per cent to ₹702.85, with HDFC Life dropping 0.89 per cent to ₹754.80. Trent fell 0.86 per cent to ₹5,624, Apollo Hospitals declined 0.83 per cent to ₹6,819, and Eicher Motors was down 0.73 per cent at ₹5,269.50.

“Uncertainty, which has been looming large on the global economic horizon, has spiked with the open spat between President Trump and Elon Musk,” said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd. “This unprecedented clash between two of the world’s most powerful and mercurial personalities will have its consequences on the policies of the US administration.”

The Trump-Musk controversy emerged as a key concern for global markets, with Trump expressing disappointment over Musk’s stance on his tax policy bill, prompting Musk to retaliate saying Trump would have lost the election without him. However, markets found some relief in Trump’s announcement of a “very good” call with Chinese President Xi Jinping regarding renewed trade talks.

“This Friday morning brings a mix of news for the markets,” noted Prashanth Tapse, Senior VP Research at Mehta Equities Ltd. “On the negative side, a public spat between Donald Trump and Elon Musk has turned ugly… On the positive side, Trump also stated he had a very good call with China’s President Xi.”

Market participants are closely watching the Reserve Bank of India’s monetary policy announcement, with widespread expectations of a 25 basis points rate cut. “In today’s monetary policy the RBI is likely to cut policy rates by 25 bp. This is already factored in by the market,” Vijayakumar explained. “More important will be the RBI commentary on growth and inflation projections for FY26.”

Foreign Institutional Investors remained net sellers, offloading equities worth ₹208 crore on June 5, while Domestic Institutional Investors provided market support with net purchases of ₹2,382 crore. The India VIX declined 4.21 per cent to 15.08, suggesting lower near-term volatility expectations.

Technical analysts maintained a cautiously optimistic outlook despite the morning weakness. “The sharp but brief spike to 24898 put the bulls briefly in action yesterday, but the close back into the consolidation band suggests that rejection trades are equally strong,” said Anand James, Chief Market Strategist at Geojit Investments Limited. Support levels for Nifty are positioned at 24,598, 24,500-398, and 24,060.

Sectoral performance showed mixed trends with capital markets and defence stocks outperforming in recent sessions, while selective profit-booking was observed in PSU banks and media stocks. “We believe that the level of 24,600/81000 will serve as a key support zone for traders,” said Shrikant Chouhan, Head Equity Research at Kotak Securities.

Commodity markets reflected global uncertainties with gold prices easing from elevated levels. “Gold prices have eased from elevated levels following US President Donald Trump’s announcement of renewed trade talks with Chinese President Xi Jinping,” said Aksha Kamboj, Vice-President at India Bullion and Jewellers’ Association. “This development has lifted sentiment around risk assets, raising hopes that the ongoing tariff war between the two nations might soon reach a truce.”

Silver continued its strong momentum, surging to $36 per ounce and reaching its highest point since February 2012. Crude oil traded around $63, with prices supported by seasonal demand optimism and early geopolitical risks, including Canadian wildfires that temporarily reduced output by 7 per cent.

Market experts expect continued volatility as investors await clarity on both domestic monetary policy and global trade developments. “US bond yields are likely to fall further, which will be positive for EMs, particularly India, whose growth prospects are the brightest,” Vijayakumar added, highlighting potential positive spill-overs from weakening US economic indicators.

The market’s immediate focus remains divided between the RBI policy outcome and US employment data, with traders positioning for potential rate cut benefits, while remaining cautious about global headwinds from the Trump-Musk dispute and ongoing US-China trade uncertainties.

Published on June 6, 2025