Stock Market Crash: 7 Reasons Why Sensex, Nifty Fell 1% On June 3; Indian Stocks Prediction For June 4

The Indian stock market extended its losing streak on Tuesday, with Sensex falling below 80,600 levels and Nifty struggling to breathe around the 24,500 mark. Broad-based selloffs emerged across sectoral indices as the RBI policy meeting commenced on June 3. Investors are jittery amidst rising global tensions. On Wednesday, the market is expected to be bearish.

Sensex, Nifty:

After falling by nearly 799 points and hitting an intraday low of 80,575.09, Sensex closed at 80,737.51, down by 636.24 points or 0.8%. Except for M&M share, all other 29 scrips listed on Sensex closed bearish. Adani Ports, Bajaj twins, Power Grid and Eternal shares dragged the benchmark most.

Of the total 4,144 stocks that traded on BSE, about 1,673 stocks advanced and 2,344 stocks declined with 127 stocks unchanged. Despite the bearish trend, 108 stocks touched new 52-week highs, while only 37 stocks hit new 52-week lows. BSE-listed companies' market cap is around Rs 4,43,16,679.96 crore.

During the trading session, Nifty 50 dipped by as much as 214.45 points to hit an intraday low of 24,502.15. The benchmark closed at 24,542.50, lower by 174.10 points or 0.70%.

"Indian equity markets closed lower on Tuesday amid heightened volatility, weighed down by the absence of domestic triggers and persistent global uncertainty surrounding trade tariffs. The Nifty50 ended the session at 24,543, down 0.7%, while the Nifty Midcap and Smallcap indices saw mixed trends, ending 0.5% lower and 0.1% higher, respectively. All major sectoral indices ended in the red, except Nifty Realty, which extended its gains for a second consecutive session," said Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services in a note.

He added, "Defence stocks also witnessed renewed interest amid heightened geopolitical tensions, particularly due to the escalating Russia-Ukraine conflict. Optimism over a potential RBI rate cut was offset by global concerns around trade tariffs and rising geopolitical tensions. Attention is likely to shift towards monsoon-linked themes and interest rate-sensitive sectors such as PSU banks and real estate, amid hopes that monetary easing could support economic momentum."

5 Major Movers Of Market On June 3:

1. Financial Stocks Downfall:

Major heavyweight financial stocks tumbled ahead of RBI policy. Nifty Financial Services (25/50) declined by 223.90 points or 0.8% to close at 28,197.40. Stocks like ICICI Prudential, Bajaj Finserv, Bajaj Finance, SBI Life and HDFC Life plunged by 1.2% to 3.5%.

2. Private Bank Stocks Nosedive:

Banking stocks will be in focus this as market is predicting for a 25 basis points rate cut from RBI on Friday. RBI's 3-days policy meet has commenced from June 3rd onward, and will end on June 6th, with outcomes. Nifty Private Bank dropped by 1.2% to finish at 27,346.35. Except for Federal Bank shares, all other stocks are in deep red.

Yes Bank share price nosedived by more than 10% due to Rs 2,022 crore block deal buzz. Stocks like IDFC First Bank, Bandhan Bank, RBL Bank, IndusInd Bank, Axis Bank and Kotak Bank tumbled by 1.1% to 3%.

3. Consumer durable stocks fall too:

Nifty Consumer Durables index plummeted by 0.7% to end at 36,916. PG Electroplast, Bata India, Kajaria Ceramics, Crompton, Voltas, Havells and Dixon Technologies shares slipped by 1% to 3.5%.

4. Oil & Gas Stocks:

Oil and gas stocks are also under pressure despite crude oil prices surging sharply owing to escalating geopolitical tensions and OPEC+ staying firm on its planned production increase.

Oil marketing companies (OMCs) like BPCL, HPCL, and Indian Oil tumbled by 2% to 2.5%. While Adani Total Gas, Oil India, Indraprastha Gas and Reliance Industries shed 1% to 1.5%.

5. Adani Stocks Under Pressure:

After a brief tug-of-war between bears and bulls in Adani Group stocks, all Adani shares closed in red. Adani Energy Solutions, Adani Green Energy, Adani Ports, Adani Power, Adani Total Gas, and Adani Enterprises stocks contracted by 2% to 2.5%. In the trading sessions, the fall was as steep as 3%.

Adani stocks came under pressure after the Wall Street Journal (WSJ) reported that the US has likely issued a new investigation into Gautam Adani's port-to-power empire, alleging links between Adani entities and Iranian LPG. The flagship company, Adani Enterprises, clarified on the news, saying they are " baseless and mischievous."

"Adani Group stocks came under pressure after reports of a U.S. probe into alleged sanctions violations, dragging down large-cap indices further," Satish Chandra Aluri, Lemonn Markets Desk said.

6. FMCG, PSU Bank, IT Stocks Impact:

Other sectoral indices like Nifty IT, Nifty PSU Bank, and Nifty FMCG were also down by nearly a per cent. Nifty Realty index outperformed with upside of more than 1.2% due to rate cut expectations, media stocks were marginally up.

7. Global Tensions:

Key factors behind the decline included rising global trade tensions after the U.S. announced a sharp hike in steel and aluminium tariffs, hurting metal exporters and investor sentiment. Weak U.S. and Chinese manufacturing data also signalled slowing global demand. Additionally, concerns over the RBI's policy guidance and rising U.S. bond yields-amid discussions of a massive $3.8 trillion tax-and-spend bill-added to the risk-off tone, as per Aluri.

Sensex, Nifty Prediction For June 4:

Khemka believes capital market stocks are expected to remain in the spotlight, with improved liquidity across the board driven by a surge in retail investor participation, renewed FII inflows, and growing optimism around domestic equities. He added, "With the Q4 earnings season largely behind us, markets are expected to remain in a consolidation phase as participants shift focus to key macro trends and global cues."

Also, Vikram Kasat, Head - Advisory, PL Capital said, persistent global uncertainties, including the ongoing Russia-Ukraine conflict, continue to impact Indian markets. The war has disrupted global supply chains, leading to increased input costs and reduced demand for exports, thereby affecting Indian businesses and contributing to market volatility. Additionally, India's reliance on discounted Russian oil amidst Western sanctions has introduced further complexities, potentially influencing investor sentiment. Despite these challenges, the bromine segment remains stable, supported by consistent global demand and supply-side constraints, offering a positive near-term outlook amid broader market uncertainties."

For Wednesday, Shrikant Chouhan, Head of Equity Research, at Kotak Securities said, "We believe that the intraday market texture is weak, but a fresh sell-off is possible only if the level of 24,450/80500 is breached. Below this, the index could decline to 24,320-24,300/80100-80000. On the upside, if the index moves above 24,600/81000, a quick pullback rally towards the 20-day SMA or 24,700/81300 could occur. Further upside may also continue, potentially lifting the market to 24,760/81500."

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.