Indian benchmark indices traded sharply lower on June 2, with the Sensex tumbling over 300 points and the Nifty breaching the 24,650 mark. A confluence of negative global cues, rising crude oil prices, foreign fund outflows, and caution ahead of the Reserve Bank of India’s upcoming monetary policy decision triggered broad-based selling in largecaps. However, smallcap stocks managed to buck the trend, posting modest gains amid sectoral divergence and retail investor interest.
Benchmarks Slump as Global Risk-Off Mood Intensifies
At the day’s low, the Sensex was down 349.75 points or 0.43% at 81,024, while the Nifty dropped 86.05 points or 0.35% to 24,630.55. Market breadth on the BSE remained relatively balanced with 1,956 stocks advancing and 1,341 declining. A total of 140 stocks traded unchanged.
The broader Nifty Smallcap index gained 0.5%, and the BSE Midcap index traded flat. Among sectoral indices, metals, PSU banks, and realty outperformed, each gaining about 0.5%. In contrast, private banks dragged the indices lower, with their sub-index shedding 0.4%.
M&M, HDFC Bank, Hindalco Rise; Adani Ports, Coal India Drag
On the Nifty 50, stocks such as Mahindra & Mahindra, HDFC Bank, Hindalco, Eternal, and Shriram Finance emerged as notable gainers, aided by positive earnings sentiment and rotational buying. Conversely, Coal India, Adani Enterprises, Apollo Hospitals, Adani Ports, and SBI Life Insurance were among the top laggards, reflecting risk-off sentiment in select heavyweight counters.
Weak Global Cues and Crude Oil Rally Add to Market Pressures
Multiple factors combined to weigh on market sentiment:
1. Foreign Fund Outflows
Foreign Institutional Investors (FIIs) net sold Indian equities worth Rs 2,589.47 crore on June 1. Persistent FII selling amid global uncertainty and policy jitters has exerted pressure on blue-chip stocks.
2. Crude Oil Prices Climb
Brent crude rose 0.57% to USD 85 per barrel, spurred by lower-than-expected supply increases from OPEC+ and fresh geopolitical concerns. Higher oil prices pose a direct risk to India’s inflation and current account dynamics due to its 85% import dependency.
3. Geopolitical Tensions Escalate
Ukrainian President Zelenskyy reiterated threats of drone attacks on Russia, while Iran signaled rejection of US proposals on nuclear talks. These developments fueled global risk aversion and added to safe-haven demand for the dollar.
4. US-China Trade Concerns Return
Tensions resurfaced after former US President Donald Trump accused China of reneging on tariff rollback agreements. Reports indicate the US is planning to double tariffs on steel and aluminium to 50%, reviving global trade worries.
5. Wall Street Weakness & Data Concerns
US equity futures pointed to a weak opening as investors awaited the US jobs report, manufacturing data, and ECB commentary. Any surprise in the jobs data—expected to show a 130,000 payroll increase with 4.2% unemployment—could swing global yields and equities.
Domestic Triggers: RBI Policy, Rupee Weakness Add to Caution
6. RBI MPC Outcome on June 6
Investors are closely tracking the three-day RBI Monetary Policy Committee meeting that began on Tuesday. While a status quo on repo rates is anticipated, focus remains on the RBI’s tone around liquidity, inflation forecasts, and bond market implications.
7. Rupee Weakens Amid Global Headwinds
The rupee depreciated 10 paise to 85.49/USD in early trade, weighed by higher crude, FII outflows, and general risk-off sentiment. The domestic currency is expected to remain under pressure until clarity emerges from the central bank’s guidance.
Smallcaps and Price Shockers: Retail Interest Defies Market Weakness
Despite the weak broader market, smallcaps rallied, led by sharp price movements in select counters. Notable three-day gainers included:
NRB Industrial: +41.63% to ₹36.57
Lypsa Gems: +27.58% to ₹10.64
Ruchinfra: +22.53% to ₹10.17
Omaxe: +20.99% to ₹103.11
Agro Phos India: +20.66% to ₹40.48
Sameera Agro: +20.09% to ₹103.40
Servotech Renewables: +15.38% to ₹142.35 (gains repeated across sessions)
ADF Foods: +13.95% to ₹268.90
AstraZeneca Pharma: +13.84% to ₹9,075
These stocks saw substantial interest from high-risk retail participants, driven by momentum trades and speculative inflows.
Highlights:
Sensex down 349 points, Nifty falls 86 points amid weak global cues, high oil prices, and FII outflows
Smallcap index gains 0.5%; BSE Midcap trades flat
Sectoral divergence: PSU banks, metals, and realty gain; private banks decline
M&M, HDFC Bank, Hindalco lead gainers; Coal India, Apollo Hospitals, Adani Ports among top losers
FII outflow: ₹2,589.47 crore selling on June 1
Brent crude rises to $85/barrel, stoking inflation concerns
Rupee weakens to 85.49/USD, down 10 paise
RBI MPC meet in focus, with policy outcome due June 6
Servotech Renewables, Omaxe, NRB Industrial lead smallcap rally on sharp three-day gains
India VIX up 6% to 17.12, indicating higher expected volatility
