US-India Trade Uncertainty Keeps Markets on Edge; IT Sector Faces Pressure

Dalal Street began the new week on a positive note, but experts warn that uncertainties around US-India trade relations may keep investors cautious, especially in the IT sector.

Positive Start for Indian Markets

The Indian stock market opened Monday’s session on a strong footing, extending last week’s momentum. At 09:15 a.m., the Sensex was up 288.85 points (0.36%) at 80,999.61, while the Nifty 50 gained 83.10 points (0.34%) to trade at 24,824.10.

This marks the fourth consecutive session of gains for the Nifty 50, supported by optimism that tariff-related tensions between India and the United States may ease. Market participants believe that any clarity on trade negotiations could set the tone for the coming weeks.

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Sector-Wise Performance

Broad-based buying was seen across indices, with metals and autos leading the rally. Here’s a quick look at the major sectoral moves:

• Nifty Metal: Up 1.1%

• Nifty Auto: Up 1.03%

• Nifty Realty: Up 0.75%

• Nifty IT: Up 0.51%

• Nifty Pharma, FMCG, PSU Bank, Energy, Infra, and Media: Gained between 0.07% and 0.40%

The strong sectoral performance indicates growing confidence among investors, despite global headwinds.

Auto Stocks in the Driver’s Seat

Auto stocks were among the top gainers of the session after a bullish outlook from Bank of America Securities. The brokerage highlighted that conditions for an auto upcycle are firmly in place, projecting a robust 8% CAGR in volume growth between FY25 and FY28.

This positive forecast lifted investor sentiment across auto majors, who are already witnessing steady demand recovery. Analysts suggest that favorable financing conditions, new launches, and rising consumer confidence could keep the momentum strong in the coming quarters.

Metals Shine as Demand Outlook Improves

The metal sector also attracted strong buying interest after Morgan Stanley raised target prices for major steel companies. The investment bank expects domestic steel prices to remain firm, supported by an improving demand environment both domestically and globally.

Experts believe that the ongoing government focus on infrastructure spending and resilient export demand could further support the outlook for steel and non-ferrous metals.

IT Sector Remains Under Pressure

While most sectors advanced, the IT sector continues to face headwinds due to persistent concerns over US-India trade negotiations. Experts point out that Indian IT services companies earn a significant share of their revenue from the US market, making them highly sensitive to tariff policies and visa regulations.

If trade discussions fail to bring clarity, IT stocks may witness bouts of volatility. Investors are advised to keep a close watch on global cues and policy announcements that could impact outsourcing and technology services.

Expert Views on Market Outlook

Market experts believe that the current momentum could be sustained in the short term, but the uncertainty in trade relations between India and the US remains a risk factor.

• According to analysts, easing tariff concerns may boost investor confidence in export-oriented sectors like metals, textiles, and engineering.

• However, IT and pharma may remain volatile given their high dependency on the US market.

• Broader market sentiment is expected to stay positive, supported by strong domestic fundamentals and steady FII inflows.

Global Cues in Focus

The performance of Indian equities is also being guided by global factors. Signs of cooling inflation in the US and expectations of a possible rate cut later this year have buoyed emerging markets, including India.

Additionally, crude oil prices have remained stable, easing concerns for import-dependent economies like India. However, any sharp spike in energy prices could quickly change the equation.

Retail Investors Show Confidence

Retail participation in the market has been on the rise, with domestic investors continuing to absorb foreign outflows in recent sessions. The optimism is reflected in the broad-based gains across mid-cap and small-cap stocks, which have shown resilience despite global uncertainties.

Market watchers suggest that retail investors should remain selective, focusing on sectors with strong earnings visibility while keeping an eye on global risks.

What Lies Ahead?

Going forward, the market’s direction will largely depend on:

1. US-India Trade Negotiations – Any positive or negative update could significantly sway investor sentiment.

2. Global Economic Data – Inflation, US Fed policy, and global growth indicators will remain key drivers.

3. Domestic Corporate Earnings – The upcoming earnings season will provide clarity on the health of key sectors.

4. Sector-Specific Trends – Autos and metals are expected to remain in focus, while IT may continue to see cautious trade.

Key Takeaways

• Indian markets opened higher, with Sensex near 81,000 and Nifty close to 24,825.

• Metals and autos led the rally, backed by positive brokerage notes and strong demand outlook.

• IT stocks remain under pressure due to uncertainties in US-India trade talks.

• Experts suggest the market trend remains positive but global risks cannot be ignored.

Conclusion

The Indian stock market has started the week on a strong note, driven by optimism around easing tariff tensions and robust sectoral performance in autos and metals. However, the shadow of uncertainty in US-India trade relations continues to loom large, particularly for IT companies.

For investors, the message is clear: stay optimistic but cautious. While domestic fundamentals remain strong, global cues and trade developments will continue to guide market movements in the coming weeks.