Indian stock indices experienced declines for the third consecutive session today, with both the Sensex and Nifty ending in the red. While the overall market sentiment remained cautious, the realty sector bucked the trend, showcasing resilience with a gain of 1%.

Market Performance:

The BSE Sensex closed at 80,688, a decrease of 693 points or 0.85%. The NSE Nifty50 mirrored this downward trend, settling at 24,539, a loss of 188 points or 0.72%. This decline was observed across various sectors, with finance and IT stocks particularly contributing to the negative sentiment. Earlier in the trading session, the Sensex had plummeted nearly 800 points, while the Nifty touched a low of 24,502, highlighting the volatility experienced during the day. The total market capitalization of BSE-listed companies witnessed a significant reduction of ₹1.84 lakh crore, reaching ₹443.66 lakh crore.

In contrast to the overall market downturn, broader market indices demonstrated resilience. The Nifty Midcap 100 and Nifty Smallcap 100 ended with gains, indicating continued interest in mid and small-cap stocks. However, today Nifty MidCap was down 0.11%, while the Nifty SmallCap was down 0.44%.

Realty Sector Outperforms:

The realty sector stood out as an exception, gaining approximately 1%. This positive performance suggests sustained investor confidence in the real estate market, driven by factors such as increasing demand for housing and commercial spaces.

Factors Influencing Market Decline:

Several factors contributed to the continued decline in Indian stock indices:

• Global Trade Tensions: Escalating global trade tensions, particularly those arising from the U.S., weighed heavily on investor sentiment. U.S. President Donald Trump's announcement of plans to double tariffs on imported steel and aluminum, effective June 4, 2025, has raised concerns for Indian metal exporters. While the immediate impact may be limited, this tariff hike has introduced additional uncertainty into the global trade landscape.
• Weak Global Economic Data: Recent economic data indicating a contraction in U.S. manufacturing for the third consecutive month added to the prevailing negative sentiment. Concerns about a potential slowdown in global economic growth have prompted investors to exercise caution.
• RBI Policy Decision: As the Reserve Bank of India (RBI) approaches its monetary policy decision, rate-sensitive sectors such as banking, financials, autos, and consumer stocks have experienced pressure. Investors are closely monitoring the RBI's stance on interest rates, and any indication of a hawkish approach could further dampen market sentiment.
• U.S. Debt and Bond Yields: Rising U.S. debt levels and bond yields have contributed to market volatility. Concerns about the sustainability of U.S. debt and the potential for higher interest rates have spooked investors, leading to a sell-off in equities.
• Oil Price Volatility: Fluctuations in oil prices have also played a role in shaping market sentiment. Higher crude prices tend to negatively impact India's trade balance and fuel inflation, which in turn dampens investor confidence.

Expert Perspectives:

Market experts suggest that the domestic market currently lacks fresh positive catalysts to propel the key indices above their existing range. While the long-term outlook remains positive, supported by strong economic growth projections, near-term triggers such as earnings growth and geopolitical developments are keeping investors on the sidelines. Tepid earnings growth is identified as a significant challenge, and a recovery in earnings growth could potentially trigger a market breakout. High valuations, particularly in the broader market, remain a concern.

Broader Market Trends:

Despite the overall market decline, retail and high net-worth individuals (HNIs) have shown increased interest in mid and small-cap stocks. Foreign Portfolio Investors (FPIs), however, have reduced their buying of Indian equities, contributing to the market's downward pressure.