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The Indian stock market experienced a significant downturn on June 2, primarily driven by escalating global trade tensions and disappointing global cues. Both the BSE Sensex and the NSE Nifty closed substantially lower, reflecting investor anxieties and risk aversion. This selloff was particularly pronounced in the IT and metal sectors, which bore the brunt of the negative sentiment. The broader market also displayed a mixed undertone, indicating that while some stocks managed to advance, the overall trend was clearly downward. The March-quarter GDP data, although surprisingly positive, was not enough to offset the prevailing negative influences. The BSE Sensex plunged by 573.69 points, equivalent to a 0.70% decrease, settling at 80,877.32. Similarly, the NSE Nifty shed 162.75 points, marking a 0.66% decline, and closed below the crucial 24,600 level. The market's negative reaction can be attributed to several interconnected factors. Renewed tariff threats from the United States, especially concerning steel imports, played a significant role in unnerving investors. These threats amplified existing concerns about foreign fund outflows and escalating geopolitical uncertainty, further dampening market sentiment. The IT and metal sectors were particularly vulnerable to these pressures, experiencing a wave of selling that dragged the broader indices lower. Despite the widespread decline, there were pockets of resilience in certain sectors, notably FMCG (Fast-Moving Consumer Goods) and PSU (Public Sector Undertaking) banks. These sectors managed to buck the trend, offering some counterbalance to the overall market downturn. However, their positive performance was not sufficient to prevent the overall negative outcome. The market breadth on the BSE indicated a mixed picture, with 1,783 stocks advancing, 1,565 declining, and 165 remaining unchanged by the close. This suggests that while a significant number of stocks experienced gains, the overall weight of the declining stocks was greater, leading to the overall negative market performance. The advance-decline ratio underscores the cautious and selective approach adopted by investors amid the prevailing uncertainties.
Examining the top gainers provides insights into the specific factors driving positive performance in certain stocks. Godrej Consumer Products led the gains on the Nifty FMCG index, closing nearly 3% higher. This rally was fueled by the government's decision to slash the basic import duty on crude edible oils, which boosted sentiment in the FMCG sector. The reduced import duty is expected to benefit companies like Godrej Consumer Products by lowering their input costs and improving their profitability. Central Depository Services (CDSL) witnessed a substantial jump of 10% on the back of a sharp rise in trading volumes. This surge in trading activity suggests increased investor participation and market activity, which directly benefits CDSL as a depository participant. The rally in CDSL also had a positive spillover effect on other capital market-related stocks, indicating a broader improvement in sentiment within the financial services sector, although overall market sentiment remained muted. Public sector banks extended their recent uptrend, with the Nifty PSU Bank index emerging as the top sectoral gainer for a second consecutive session. Bank of Maharashtra, Union Bank, and Indian Overseas Bank rose significantly, buoyed by expectations of a rate cut and better-than-expected Q4 GDP numbers. The PSU pack outperformed the broader Nifty Bank index, indicating strong investor confidence in the growth prospects of public sector banks. Apollo Hospitals saw modest gains after posting robust Q4FY25 results, with a significant year-on-year jump in consolidated net profit. This strong performance was attributed to robust growth across healthcare services, diagnostics, and digital health verticals. Vodafone Idea shares edged up despite the company reporting another quarter of widening losses. This counterintuitive move might be due to the loss being slightly less than anticipated, or speculative trading. However, brokerages remain cautious about Vodafone Idea's prospects, highlighting persistent subscriber loss and structural challenges facing the company. The gains were limited as concerns regarding long-term sustainability persisted.
On the other hand, the top losers shed light on the factors contributing to negative performance in certain sectors. Shares of IT companies declined amid intensifying trade tensions between the US and China. The Nifty IT index fell over a percent, extending its losing streak to a second day, as investors turned risk-averse on fears of further escalation in global trade frictions. The IT sector is particularly vulnerable to trade tensions due to its reliance on global trade and supply chains. Nykaa's stock slipped despite posting a sharp jump in consolidated net profit. This could be attributed to the possibility that the positive earnings were already priced in by investors, or a general shift in investor sentiment towards caution. Alembic Pharma shares fell after the company received a Form 483 from the USFDA with observations for its Panelav manufacturing facility. Such regulatory scrutiny often leads to investor concerns about potential production disruptions or compliance issues. JSW Steel and other steel stocks were under pressure after US President Trump announced plans to double tariffs on imported steel. This move is expected to exacerbate pressure on global steelmakers, leading to lower profitability. Shares of Inox Wind declined after the company reported its March-quarter earnings, but analysts remain largely optimistic about the stock's prospects. The decline might be temporary and driven by short-term profit-taking. Overall, the market's performance on June 2 was characterized by a mix of positive and negative factors, but the overall trend was clearly downward due to heightened global trade tensions. The key takeaway is that external factors like global trade tensions and regulatory actions continue to exert a significant influence on Indian stock market performance. Investor sentiment remains sensitive to geopolitical risks and economic uncertainties, underscoring the need for caution and a selective approach to investment.
Moreover, the market's behavior underscores the interconnectedness of global markets and the vulnerability of the Indian economy to external shocks. The renewed tariff threats from the US, particularly concerning steel imports, directly impacted the performance of steel stocks, demonstrating the ripple effect of trade policies on specific sectors. The IT sector, being heavily reliant on exports and global supply chains, also suffered from the escalation in trade tensions between the US and China. The divergent performance of FMCG and PSU banks highlights the importance of domestic factors in mitigating the impact of global headwinds. The government's decision to reduce import duties on edible oils provided a boost to the FMCG sector, while expectations of a rate cut and strong Q4 GDP numbers supported the growth of PSU banks. The mixed market breadth, with a near balance between advancing and declining stocks, suggests that investors are selectively allocating capital based on individual company performance and sector-specific opportunities. The rise in India VIX, reflecting rising geopolitical risks, underscores the increased volatility and uncertainty in the market. Investors are closely monitoring global events and adjusting their portfolios accordingly. The disclaimer provided by Moneycontrol.com emphasizes the importance of seeking advice from certified experts before making any investment decisions. This is particularly crucial in the current market environment, where volatility and uncertainty are high. Investors should conduct thorough research and carefully consider their risk tolerance before investing in the stock market. Overall, the Indian stock market's performance on June 2 serves as a reminder of the complex interplay of global and domestic factors that influence market sentiment. Investors need to remain vigilant, adapt to changing market conditions, and seek professional advice to navigate the uncertainties and maximize their investment returns. The resilience of certain sectors, such as FMCG and PSU banks, offers hope for future growth, but the overarching concerns about global trade tensions and geopolitical risks remain a significant challenge for the Indian economy and its stock market.
Source: Top gainers and losers today: Stocks that moved the most on June 2