Markets slip as pharma & banking drag, while auto & telecom shine
The Indian stock market shows signs of cautious consolidation ahead of another mixed session abroad and with sector-specific headwinds. The key benchmark indices were trading in the negative at mid-morning, weighed down by heavy selling of pharma, financial, and PSU stocks. Downside, however, is being limited by some positive momentum in select auto and telecom names.
Market Overview
BSE Sensex: Trading lower by 224 points or 0.28%, hovering around the 80,570 mark.
NSE Nifty 50: Down 79 points or 0.33%, trading near 24,380.
Nifty Midcap 100: Down by 0.68%, reflecting weakness in broader markets.
Nifty Smallcap 100: Lower by 0.71%, under pressure from profit-booking.
Despite a strong start in pre-opening trades, benchmark indices turn volatile, dragged by underperformance in pharmaceuticals and banks. Broader markets underperform the headline indices as midcap and smallcap investors book profits after recent gains.
Sectoral Performance Snapshot
Pharmaceuticals:
The pharmaceutical sector emerges as the top laggard, shedding over 1.5% in the first half of trade. Market participants are reacting to news that the U.S. administration is planning an executive order aimed at expediting domestic production of essential medicines. This move is expected to reduce reliance on overseas imports, including from India, which could hurt export-focused pharma majors. Stocks like Sun Pharma, Lupin, and Cipla are witnessing pressure.
Financials and Banks:
Financial stocks, particularly large-cap banks, are down around 0.7%. Profit-booking is evident in stocks like HDFC Bank, ICICI Bank, and Axis Bank, which have recently seen strong rallies. The selling pressure is attributed to investors shifting focus toward upcoming quarterly earnings and their impact on loan book guidance.
Auto:
The auto sector is showing relative strength, led by gains in Mahindra & Mahindra, which is up over 3%. The rally is fueled by expectations of margin expansion and robust Q4 results due later this week. Bajaj Auto and Hero MotoCorp also support the sector’s resilience, gaining modestly on improved demand outlook and easing input costs.
Telecom:
Bharti Airtel and Reliance Jio’s parent company are among the top gainers on the Nifty. Airtel, in particular, is attracting buying interest ahead of its earnings release and reports of increased average revenue per user (ARPU). The telecom sector overall is buoyant, benefiting from robust subscriber additions and tariff hikes.
Key Stock Movers
Yes Bank:
Yes Bank shares have jumped as much as 9.6% in intraday trade. The rally is sparked by reports indicating advanced-stage discussions with Japan-based Sumitomo Mitsui Banking Corporation (SMBC) for a significant stake acquisition. Market sentiment turns optimistic on expectations of fresh capital infusion and strategic partnership.
Ather Energy:
Electric vehicle manufacturer Ather Energy makes its debut on the Indian bourses today. The stock opens at a modest 2% premium over its IPO price, reflecting cautious optimism. Market participants are watching post-listing performance closely amid valuation concerns and high-growth expectations in the EV sector.
Paras Defence and Space Technologies:
The stock gains nearly 4% after the company signs a memorandum of understanding with Israeli drone manufacturer HevenDrones. The collaboration focuses on joint development of drones for defense and commercial use cases. The announcement energizes investor sentiment amid rising global defense budgets and India’s emphasis on indigenous defense tech.
Macroeconomic Indicators
Services PMI:
India’s services sector remains in expansionary territory, with the April Services Purchasing Managers’ Index (PMI) inching up to 58.7 from 58.5 in March. The growth is supported by strong demand across sectors such as hospitality, IT services, and transportation. The positive print bodes well for India’s broader economic recovery and signals continued momentum in domestic consumption.
Currency Movement:
The Indian Rupee trades weaker against the U.S. Dollar, slipping by 5 paise to 84.35 in morning trade. Currency markets remain cautious amid rising global crude oil prices and outflows from emerging market debt. Traders anticipate further volatility ahead of the U.S. Federal Reserve’s next policy statement and India’s upcoming trade balance data.
IPO Activity and Listings
Iware Supply Chain Services:
The company is listed on the NSE SME platform with a 10% discount to its issue price. The listing disappoints investors who expected a stronger debut based on grey market activity. The tepid response is attributed to weak sentiment in the broader logistics space and conservative pricing.
Wagons Learning:
Edtech firm Wagons Learning has called off its IPO plans, citing unfavorable market conditions. The company had planned to raise funds for digital expansion and content development. Its withdrawal adds to the list of tech and education-related IPOs postponed in recent weeks due to valuation concerns.
Institutional Flow Update
Institutional investors are exhibiting mixed sentiment in early May:
Foreign Institutional Investors (FIIs) continue to be modest net buyers, having purchased Indian equities worth ₹497 crore on May 5. Their focus remains on large-cap IT, banking, and auto stocks.
Domestic Institutional Investors (DIIs) are more aggressive buyers, purchasing shares worth ₹2,788 crore in the same session. This reflects their confidence in earnings growth and stable macro fundamentals.
The positive inflow trend offers near-term support for Indian equities, even as global risks remain on the radar.
Key Themes Driving Sentiment
Global Cues and Tariff Headlines:
Traders are closely tracking developments around new U.S. tariffs on Chinese imports, which could trigger retaliatory measures. The outcome will impact global trade sentiment and indirectly influence Indian export-oriented sectors such as IT, textiles, and pharma.
Federal Reserve Policy:
With the U.S. Fed’s next policy announcement approaching, equity markets are cautious. A continued pause in rate hikes could be positive for emerging markets, including India.
Q4 Earnings Season:
India Inc. is in the thick of its fourth-quarter earnings cycle. Stock-specific movements are increasingly influenced by results. Analysts are particularly focused on profit margins, order books, and management commentary from banks, auto manufacturers, and capital goods firms.
Domestic Liquidity and Retail Participation:
Liquidity remains strong with SIP inflows and retail interest in IPOs and midcaps. However, there is also heightened sensitivity to valuation, prompting profit-booking in overbought segments.
Market Outlook
The market sentiment on May 6 reflects a cautious-to-neutral tone as global headwinds temper bullish momentum seen in April. Index levels remain close to record highs, but volatility is likely to persist ahead of the U.S. policy outcome, key earnings announcements, and monthly expiry later in the month.
Investors and traders are advised to maintain a stock-specific approach while keeping a watch on domestic macro trends and global policy signals. Volatility may present both risks and opportunities in the days ahead.
As of midday on May 6, 2025, the Indian stock market trades with a slight negative bias, largely due to weakness in pharma and banking. Select auto and telecom names continue to offer pockets of strength. With institutional buying and corporate earnings unfolding, the day is expected to remain eventful for both short-term traders and long-term investors watching for cues on broader market direction.
