Why Did the Stock Market Close Lower for the Third Day in a Row?
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Synopsis
The Indian stock market faced a downward trend for the third day in a row due to weak global indicators and ongoing foreign fund outflows. With the Sensex and Nifty both experiencing losses, investors are on edge awaiting the RBI's interest rate decision.
Key Takeaways
- Sensex fell by 636.24 points to close at 80,737.51.
- Nifty decreased by 174.10 points to 24,542.50.
- Midcap and Smallcap indices outperformed Largecap.
- Investors are awaiting the RBI's interest rate decision.
- Gold prices remain flat near Rs 97,700.
Mumbai, June 3 (NationPress) The Indian stock market ended its session in negative territory on Tuesday, marking the third consecutive trading day of decline as a result of weak global cues.
The Sensex closed down by 636.24 points, or 0.78 percent, settling at 80,737.51, while the Nifty decreased by 174.10 points, or 0.70 percent, to reach 24,542.50.
On a sectoral level, the biggest detractors included IT, PSU Bank, Financial Services, FMCG, and Energy.
Interestingly, Midcap and Smallcap indices outperformed their Largecap counterparts. The Nifty Smallcap 100 index rose by 18.60 points, or 0.10 percent, to 18,114, whereas the Nifty Midcap 100 index fell by 258.45 points, or 0.45 percent, settling at 57,517.
The market saw a decline during a volatile trading session, losing more than half a percent due to weak external factors.
“After an initial uptick, the Nifty fluctuated significantly in early trading; however, a sharp drop below the short-term moving average (20 DEMA) later in the session kept the sentiment negative,” remarked Ajit Mishra from Religare Broking Ltd.
Analysts indicated that ongoing foreign fund outflows, alongside weak global cues such as geopolitical tensions and uncertainty regarding trade agreements, are pressuring the markets.
However, the banking sector's relatively stronger performance may help mitigate the decline's pace, they noted.
Investors seem to be awaiting definitive commentary following the RBI's interest rate decision later this week.
Meanwhile, the Indian rupee reversed Monday’s gains amid risk-averse sentiment, a rebound in the US dollar, and foreign fund outflows.
In the short term, the USD/INR spot is projected to fluctuate between 85.10 and 85.90, according to Dilip Parmar from HDFC Securities.
Gold prices remained largely unchanged near Rs 97,700 after a significant rally of nearly Rs 2,000 yesterday, reaching Rs 98,000 on MCX. Experts suggest that the market is now consolidating ahead of important U.S. economic releases.
Point of View
It is essential to remain vigilant as the Indian stock market continues to fluctuate due to external factors. The ongoing geopolitical tensions and uncertainty in global markets necessitate a cautious approach while navigating investment strategies. As always, we advocate for informed decision-making based on thorough analysis.
NationPress
07/06/2025
Frequently Asked Questions
Why is the stock market declining?
The decline in the stock market is largely due to weak global cues, ongoing foreign fund outflows, and geopolitical tensions affecting investor sentiment.
What sectors are most impacted?
The sectors that have faced the most significant declines include IT, PSU Bank, Financial Services, FMCG, and Energy.
What should investors be aware of?
Investors should keep an eye on the upcoming RBI interest rate decision and the performance of the banking sector, which may help mitigate losses.
How is the Indian rupee performing?
The Indian rupee has reversed its earlier gains due to risk-averse sentiments and a rebound in the US dollar.
What are the gold prices indicating?
Gold prices remain stable after a recent rally, signaling market consolidation ahead of important economic releases.
