Dalal Street saw a choppy start on the Tuesday, June 3 session, however, towards the latter half of the session, bears wrestled control away from the bulls to drive the Nifty 50 index under the 24,600 mark, while Sensex tumbled over 650 points. Weak global cues, including slowing macroeconomic growth and rising geopolitical concerns, weighed on investor sentiment.
At close, the Sensex settled down 636.24 points or 0.78 percent at 80,737.51, and the Nifty was down 174.10 points or 0.70 percent at 24,542.50. About 1701 shares advanced, 2148 shares declined, and 134 were shares unchanged.
On the sectoral front, most indices traded with sharp losses, while the few outliers - Nifty Media, Nifty Realty- managed to record gains between 0.5 to 1.2 percent. Information technology, banking and financials, along with FMCG stocks sulked in trade, as lofty valuations and dampening growth prospects kept investors at bay.
Smallcap stocks held firm, rising 0.1 percent despite a muted market, while the midcap gauge fell 36 basis points. India VIX, a measure of volatility and caution in the market, cooled by 3.5 percent to the 16.56 level.
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The selloff deepened after the Organisation for Economic Cooperation and Development (OECD) on Tuesday projected that U.S. economic growth will slow to just 1.5 percent in 2026. The agency also noted that trade policies under Donald Trump have pushed average U.S. tariff rates up from around 2.5 percent to 15.4 percent — the highest level since 1938. These elevated tariffs are expected to increase costs for both consumers and American manufacturers that depend on imported raw materials and components.
While India's long-term prospects remain constructive, Bank of America Securities remains cautious on the domestic equity markets in the near-term, led by the weakening global macroeconomic condition. BofA Securities added that given the recent rally, there are no further upsides to its end-year target for the Nifty 50 index at 25,000.
"We believe that ongoing monetary stimulus would help India revive its GDP, capex and consumption growth, but we expect a shallow revival, and thus remain conservative on GDP growth at 6.3 percent compared to the RBI's estimate of 6.5 percent," noted the broking house in a note titled 'Foundations for structural growth.'
Further, large-caps are likely to stay range-bound over the next few months, given the lofty valuations across the markets, low consumption and global uncertainties, according to Kotak Institutional Equities' Sanjeev Prasad.
In a report titled 'Stuck!', Prasad, once again, detailed the high valuations, calling Dalal Streel 'blissfully ignorant'. "The Indian market remains blissfully ignorant of the reality of a sluggish domestic outlook with likely continued weakness in consumption demand and likely slowdown in investment demand and a challenged global macroenvironment with likely low growth and possibly high inflation," the report said.
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