ETF Market Flat Tracking Weak Commodity Currencies 

Mumbai, April 7: ETFs traded mixed during the early sessions of Monday with profit booking witnessed in commodity-linked ETFs pulling down sentiment in the ETF space. Weakness was seen across precious metals ETFs whereas some strength was seen in IT and defence ETFs.

Gold ETFs Suffer as Prices Drop

ETFs that track gold prices traded lower during Monday’s session following the yellow metal lower. GOLDBEES declined by 1.44% to trade at ₹121.34 while GOLDIETF lost 1.50% to trade at ₹125.69. TATAGOLD and AXISGOLD ETF also traded in the red zone as traders booked profits in the precious metal. Spot gold prices have fallen over the past two days which has now pulled down the trend long gold ETFs. Investors seem to be booking profits on safe-haven investments following the recent sharp rally.

Silver ETFs Bear Worse Losses

Unlike gold ETFs, silver ETFs have witnessed worse losses. SILVERBEES fell by 2.56% to ₹219.80 while SILVERIETF dropped by 2.28% to ₹229.55. HDFCSILVER fell by 2.92% which showed selling continued in the commodity ETF. Silver ETFs track both industrial as well as safe-haven asset gold which leads to high volatility when global risk sentiment changes.

IT ETFs Were Key Gainers

ETFs that track IT stocks were among the few gainers during today’s session. ITBEES advanced by 0.75% to ₹34.53 while ITETF jumped by 0.79%. Buying interest was seen supported in IT stocks on hopes of steady demand globally as well as tailwind expected from rupee depreciation. The rally in the IT pack kept the losses for ETFs limited.

PSU Bank ETFs Lag Behind Peers

PSU Bank ETFs were also trading lower on continued profit booking after recent rallies witnessed in PSU bank stocks. PSUBNKBEES lost 1.21% to trade at ₹91.38 while PSUBNKIETF also traded in the red. ETFs were dragged lower as investors booked profits after recent rallies in PSU bank stocks. Markets were also trading weak amid declining buying support in financial stocks.

Defence ETFs Slightly in the Green

ETFs that track defence stocks moved slightly in the green as investor interest continue to flow in defence stocks. MODEFENCE gained 0.52% while DEFENCE edged higher by a few paisa. Ongoing geopolitical tensions surrounding Iran-UAE and Russia-Ukraine could further push the government to spend more on the defence sector.

Iran Developments Keep Market on Edge

Asian markets will continue to track geopolitical tensions between US and Iran after US President Donald Trump said that Iran will have to open the Strait of Hormuz or face “possible military action”. Tensions are again escalating between Iran and UAE as Trump threatened action if Iran blocked Hormuz. Strait of Hormuz is a crucial shipping route for oil shipments from the Middle East and closing down of the waterway will have a huge impact on oil prices and global risk sentiment.