IT and Metals Lead Rally as PSU Banks Drag Nifty

IT and Metals Take the Wheel in Friday's Sector Rotation The Nifty 50 closed nearly 1% higher on July 3, but the composition of that gain tells a more interesting story than the headline number. IT sector rotation was the day's defining trade. [HCL Technologies](/stock/HCLTECH) (NSE: HCLTECH) surged close to 5%, and [Infosys](/stock/INFY) (NSE: INFY) added roughly 2%, as investors repriced the sector against expectations of a softer US Federal Reserve rate path. When US yields ease, rupee-earning exporters with dollar-denominated revenue get a direct margin tailwind. That's not a new dynamic, but the market moved on it hard Friday. Metals joined the move. The Nifty Metal index added 1.66%, with [Tata Steel](/stock/TATASTEEL) (NSE: TATASTEEL) and [JSW Steel](/stock/JSWSTEEL) (NSE: JSWSTEEL) both catching a bid on easing input cost expectations. Iron ore and coking coal prices have softened through Q2 2025, compressing raw material costs without an equivalent drop in steel realizations domestically. That's a margin expansion setup, and the market priced some of it in Friday. Meanwhile, [SBI](/stock/SBIN) (NSE: SBIN), NTPC, and [Axis Bank](/stock/AXISBANK) (NSE: AXISBANK) weighed on the index. This wasn't indiscriminate selling, but it's worth noting: PSU-linked names that ran hard through H2 2024 are now facing a different kind of scrutiny. Credit growth at state-run lenders is moderating, and the rate cut expectations that should theoretically help bank NIMs are being offset by concerns about deposit repricing pressure. Why PSU Banks Are Underperforming Right Now The PSU bank underperformance on July 3 isn't an isolated data point. SBI has traded in a compressed range since early June, and the pattern reflects a genuine earnings visibility problem. Net interest margins across PSU lenders have peaked for this cycle. When the RBI does cut rates — and the market is increasingly pricing a 25 bps move before September — the transmission to lending rates tends to happ...