Markets closed lower for the fourth consecutive session on Monday, as a brief morning rally evaporated under the weight of renewed West Asia hostilities, surging crude oil prices and persistent foreign selling — a combination that left bulls with little to hold on to through the day.

..."Recent US strikes and the escalation in cross-border hostilities between Israel and Lebanon have exerted selling pressure on equity markets, reflecting heightened geopolitical uncertainty and a shift towards risk-off sentiment," said Vinod Nair, Head of Research, Geojit Investments Limited.

The Sensex closed at 74,267.34, down 508.40 points or 0.68 per cent from its previous close of 74,775.74, having opened the session at 75,203.02. The Nifty 50 settled at 23,382.60, down 165.15 points or 0.70 per cent from Friday's close of 23,547.75, its lowest closing level since May 12. The index opened with a 107-point gap-up but reversed sharply, shedding over 375 points from its intraday high of 23,733.70 to close near the day's low. NSE cash market turnover was subdued, falling more than 6 per cent compared to the May monthly average.

The session's losses were driven by a fresh escalation in the West Asia conflict. US strikes on Iranian military targets drew retaliatory attacks on a US installation, deepening concerns about the durability of the ceasefire and keeping the Strait of Hormuz effectively closed. Brent crude climbed above $93 a barrel, while international crude rose nearly 4 per cent. Domestic MCX Crude futures surged over 5 per cent to approach ₹8,700. For India, which depends heavily on Gulf energy imports, the disruption represents a direct macroeconomic risk.

Rising crude also dragged gold lower. MCX Gold fell around 0.92 per cent to ₹1,59,500, while COMEX Gold slipped nearly 0.80 per cent to the $4,500 zone as inflation concerns driven by energy prices weighed on bullion sentiment.

Sectorally, FMCG bore the brunt of the selling, declining 2.25 per cent, with Hindustan Unilever down 1.64 per cent to ₹2,118.10, Tata Consumer Products falling 1.73 per cent to ₹1,158.00 and ITC also ending among the losers. Higher crude raises packaging, transportation and logistics costs for consumer companies while questions over monsoon outlook cloud rural demand. PSU Banks, Realty, Auto and Financials also ended in the red. Bajaj Finance fell 1.51 per cent to ₹894.50, Mahindra & Mahindra declined 1.65 per cent to ₹2,995.20 and Max Healthcare dropped 1.68 per cent to ₹948.90.

IT was the session's standout exception, gaining over 2.55 per cent. Tech Mahindra rose 4.86 per cent to ₹1,556.00, Infosys jumped 4.63 per cent to ₹1,214.60, TCS gained 3.34 per cent to ₹2,334.30 and HCL Technologies added 2.27 per cent to ₹1,210.70. Coal India also bucked the trend, rising 3.43 per cent to ₹473.60.

Textile stocks emerged as another bright spot after the government announced a temporary removal of the 11 per cent customs duty and AIDC on cotton imports until October 2026. Since cotton accounts for 65–70 per cent of production costs for spinning mills and manufacturers, the duty waiver improves raw material availability and margin prospects. Vardhman Textiles, Arvind, Gokaldas Exports, Raymond Lifestyle, Welspun Living and Indo Count were among the beneficiaries.

Broader markets underperformed. The Nifty Midcap 100 fell 1.45 per cent and the Smallcap 100 declined 0.90 per cent. The BSE advance-decline ratio stood at 0.58, reflecting sustained selling beyond the headline index.

The Indian rupee gave up early gains to close flat against the dollar after weakening over 25 paise intraday, with USD/INR hovering near ₹95, pressured by rising crude and subdued equity sentiment.

..."The present growth-inflation dynamics has created a strong case for at least two 25 basis point rate hikes between August and December 2026," said Mandar Pitale, Head of Financial Markets, SBM Bank India, ahead of the RBI's Monetary Policy Committee meeting scheduled from June 3 to 5. The consensus expects the repo rate to be held at 5.25 per cent this week, but analysts flagged the likelihood of the RBI raising its inflation forecast for FY27 from 4.6 per cent toward the 4.9–5 per cent range and trimming its growth projection from 6.9 per cent to 6.7–6.8 per cent, with hawkish forward guidance pointing to an August hike.

..."While India's economic fundamentals remain strong, volatility may persist in the near term as we remain cautious amid geopolitical and inflation-related uncertainties," said Abhinav Tiwari, Research Analyst at Bonanza. Investors will also watch U.S. Non-Farm Payrolls and unemployment data, due later this week, as the next major trigger for global risk sentiment and commodity markets. Auto monthly sales numbers, notably Maruti Suzuki's record sales performance alongside healthy numbers from Tata Motors and M&M, provided some underlying corporate comfort but failed to lift auto stocks on the day. Progress on India-U.S. interim trade negotiations remains another variable the market will monitor for direction.

Published on June 1, 2026