Dalal Street Seesaw: Sensex, Nifty Tumble Amidst Global Jitters and Volatility

Indian equity markets witnessed a turbulent trading session on Tuesday, June 3, 2025, with benchmark indices swinging wildly before succumbing to selling pressure, as concerns over rich valuations and uncertain global trade scenarios weighed heavily on investor sentiment.

The 30-share BSE Sensex and the 50-share NSE Nifty50 both ended the day with significant losses, reversing any early optimism. The Sensex, after a tumultuous day that saw it swing approximately 1,200 points, closed at 80,737, down 636 points or 0.78%. The index recorded an intraday high of 81,774 and a low of 80,575. Similarly, the Nifty50 settled at 24,543, shedding 174 points or 0.7%, after fluctuating nearly 350 points during the session.

A Day of Swings and Slides

The trading day began on a volatile note, with indices struggling for direction. Early gains were quickly pared as selling pressure emerged across key sectors. The market plunge was attributed by analysts to a mix of factors, including ongoing concerns about high stock valuations, global trade uncertainties, particularly comments related to US trade tariffs, and continued outflows from Foreign Portfolio Investors (FPIs). Business Standard reported that investors were caught between “rich valuations, the weekly expiry of the Sensex index, and global uncertainty around Donald Trump’s trade tariffs.”

The market breadth was negative, indicating widespread selling. On the BSE, as of 3:10 PM IST, 1,753 stocks advanced while 2,208 declined, and 153 remained unchanged. A total of 4,114 stocks were traded during the day. Data also showed 256 stocks hitting their upper circuit limits, while 212 touched their lower circuit bands.

Foreign Portfolio Investors (FPIs) were net sellers on the preceding day, Monday, June 2, offloading equities worth ₹2,589 crore. However, Domestic Institutional Investors (DIIs) provided some support with net purchases amounting to ₹5,314 crore. Tuesday’s FPI activity will be keenly watched to gauge overseas investor sentiment.

Sectoral Heatmap and Stock-Specific Action

The decline was largely led by heavyweight banking and IT stocks. The Nifty Private Bank index dropped over 1%, and the Nifty PSU Bank index fell by 0.59%. The Nifty IT index also saw a significant cut of 0.67%, while the Nifty FMCG index declined by 0.49%.

In contrast to the broader trend, the Nifty Realty index managed to eke out gains of over 1%. However, the overall market sentiment remained subdued.

Out of the 50 stocks in the Nifty index, 43 ended the day with losses. Prominent losers included Adani Ports, Adani Enterprises, Coal India, Bajaj Finserv, Power Grid, Ultratech Cement, Bajaj Finance, Apollo Hospitals, IndusInd Bank, Maruti Suzuki, SBI Life, Axis Bank, NTPC, HDFC Life, TCS, and Kotak Bank, with these shares declining in the range of 1-2%.

The broader markets also reflected the cautious mood. The Nifty MidCap index fell by 0.45%, while the Nifty SmallCap index managed to close 0.1% higher, indicating a mixed performance in this segment.

Several individual stocks were in focus due to specific news. Yes Bank shares tumbled around 10% following clarifications from the bank regarding news reports about a potential stake acquisition by Sumitomo Mitsui Banking Corporation (SMBC). The bank stated it was not privy to such discussions. Adani Group stocks also faced pressure amid reports of US scrutiny over suspected Iranian LPG imports, a claim the group has denied.

Market Catalysts and Expert Commentary

Experts pointed to a confluence of domestic and global factors for the day’s volatility. “Market plunges as trade uncertainties and FPI outflows drag Sensex and Nifty down, impacting various sectors and stocks,” noted The Hindu BusinessLine. The Economic Times highlighted that “worries over global trade tensions dampened investor sentiment, overshadowing optimism about a potential rate cut by the Reserve Bank of India.”

The high valuations of Indian equities have been a recurring theme, making the market susceptible to profit-booking, especially in the face of global headwinds. The anticipation surrounding the upcoming monetary policy announcement by the Reserve Bank of India (RBI) also kept investors on edge. While there are expectations of a potential rate cut, global uncertainties could influence the central bank’s stance.

One expert quoted by the Times of India suggested that “Since the MPC is expected to cut policy rate by 25 bp in the policy meet on 8th, rate sensitives are likely to be favoured in the coming days,” indicating potential opportunities in rate-sensitive sectors depending on the RBI’s decision.

Implications for Retail Investors

The current market environment, characterized by heightened volatility, calls for a cautious approach from retail investors. The sharp swings underscore the risks associated with equity investing, particularly in the short term. Key takeaways for retail investors include:

• Risk Management: Given the volatility, it’s crucial to assess risk appetite and avoid over-leveraging.
• Diversification: Spreading investments across different asset classes and sectors can help mitigate risks.
• Focus on Fundamentals: Investing in companies with strong fundamentals and long-term growth prospects is advisable, rather than chasing momentum.
• Systematic Investing: Continuing with Systematic Investment Plans (SIPs) can help average out purchase costs during volatile periods.
• Avoid Panic Selling: Short-term market corrections are normal. Investors with a long-term horizon should avoid making hasty decisions based on daily market movements.

What to Watch Next

Investors and market participants will be closely monitoring several key developments in the coming days:

• RBI Monetary Policy: The outcome of the RBI’s Monetary Policy Committee (MPC) meeting, reportedly concluding around June 8th, will be a major trigger. The central bank’s stance on interest rates and inflation outlook will be critical.
• Global Cues: Developments related to global trade, geopolitical events, and the performance of international markets will continue to influence domestic sentiment.
• FPI Flows: The direction and quantum of FPI investments will be a key indicator of foreign investor confidence in the Indian market.
• Crude Oil Prices and Rupee Movement: Fluctuations in crude oil prices and the USD/INR exchange rate can impact inflation and corporate earnings, thereby affecting market trends.
• Technical Levels: For the Nifty50, the level of 24,500 will be a crucial support to watch. A sustained break below this could lead to further downside. Resistance levels will be tracked on any upward bounce.

The Indian stock market is navigating a complex period. While long-term prospects may remain robust, short-term volatility is likely to persist. Investors are advised to stay informed, conduct thorough research, and align their investment strategies with their financial goals and risk tolerance.

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This article is for informational purposes only and does not constitute financial advice. Always do your own research before investing.