Market Performance
On Tuesday, June 3, the Indian stock market experienced a significant downturn, driven by weak global cues, foreign fund outflows, and growing concerns over market valuations.
- Sensex opened at 81,492.50, plunged nearly 800 points intraday to hit a low of 80,575.09, and finally settled 636 points lower at 80,737.51, marking a 0.78% decline.
- Nifty 50 started at 24,786.30, dropped to an intraday low of 24,502.15, and closed at 24,542.50, slipping 174 points or 0.70%.
- The BSE Midcap Index declined by 0.52%, while the BSE Smallcap Index ended 0.07% lower.
- The total market capitalization on the BSE decreased by ₹2.50 lakh Crore, falling from ₹445.50 lakh Crore to ₹443 lakh Crore.
This marks the third consecutive session of market losses.
Main News: What Drove the Fall in Sensex and Nifty?
Multiple factors contributed to the fall in the Sensex and Nifty, with both global and domestic issues affecting investor sentiment.
Key Reasons Behind the Market Decline
- Stretched Valuations
- The Nifty 50's price-to-earnings ratio remains elevated, above its one-year average.
- Overvaluation concerns have spooked investors, particularly in the broader market segments.
- Erratic US Trade Policy
- Renewed tensions between the US and China over trade violations have reignited global trade uncertainty.
- The US is reportedly planning to double tariffs on steel and aluminum to 50%.
- Foreign Capital Outflows
- FPIs sold Indian equities worth over ₹9,000 Crore in two sessions.
- On Monday alone, they offloaded shares worth ₹2,589.47 Crore.
- Outflows were triggered by rising US bond yields and India's high equity valuations.
- Geopolitical Tensions
- Escalation in the Russia-Ukraine war, with Ukraine targeting Russian airfields.
- Rising friction in West Asia involving Iran and the US also added pressure.
- Rising Crude Oil Prices
- Brent crude rose by 0.57% to $65 per barrel.
- India, which imports 85% of its oil needs, is vulnerable to rising global oil prices.
- Weak Global Cues
- Wall Street futures pointed to a flat to negative opening.
- Global investors remain cautious amid upcoming ECB rate decisions and key US economic data.
- Uncertainty Around RBI Policy
- The Monetary Policy Committee (MPC) meeting began on Tuesday.
- While no major surprises are expected, the commentary on inflation and liquidity is under the spotlight.
- Rupee Depreciation
- The Indian rupee fell 10 paise to ₹85.49 against the US dollar.
- Higher crude prices and ongoing foreign portfolio investment (FPI) outflows further weakened the currency.
- Lack of Positive Domestic Triggers
- Q4FY25 earnings were stable but failed to lift market sentiment.
- With no fresh domestic growth catalysts, the market is treading cautiously.
- OECD Economic Outlook
- OECD cut India's FY26 GDP growth forecast by 10 bps to 6.3% and FY27 forecast by 20 bps to 6.4%.
- Projected headline inflation at 4.1% in FY26 and 4.0% in FY27.
- On the global front, the OECD expects the US economy to slow from 2.8% in 2024 to 1.6% in 2025.
Company Details: Major Drags on the Market
Several heavyweight stocks added to the pressure on the indices:
These companies recorded losses of up to 2%, which pulled down the sectoral indices.
Summary of the Article
The Indian stock market, led by the Sensex and Nifty, experienced a sharp decline on June 3 due to a combination of global economic pressures, geopolitical instability, and domestic valuation concerns.
Key takeaways:
- The Sensex fell by 636 points, and the Nifty by 174 points.
- Investors lost ₹2.50 lakh Crore in market value in a single day.
- FIIs remained strong net sellers, with ₹2,589.47 Crore outflows on Monday alone.
- Rising oil prices, geopolitical instability, and valuation pressures continue to be key concerns.
- Weak global sentiment and uncertainty around the RBI's monetary stance further dampened the market mood.
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