ET Market Watch: Sensex slumps 625 points; what triggered the drop?
Transcript
Hi, you're listening to ET Markets Radio, I am your host, Neha V Mahajan. Welcome to a fresh episode of ET Market Watch -- where we bring you the latest news from the world of stock markets every single day. Let's get to it:
Markets on a Rollercoaster Today! What Went Wrong? Sensex swung over 1,000 points before settling 624 pts lower. Here's your quick 5-point market crash decode
1. Rally Hangover? Time to Book Profits!
After a 4% rally in 2 weeks, markets were overheated. Investors hit the sell button before it gets too hot to handle.
2. Q4 Earnings
Nifty50 earnings grew under 6%. Not bad, but not enough to justify sky-high valuations at 21–22x. Reality check, activated!
3. U.S. Yields Spike, FIIs Take Flight
10-year U.S. Treasury yield jumped to 4.465%. That's money magnet for global funds—India loses the spotlight.
4. Global Mood = Nervous
Wall Street wobble + Asia in the red = no support system for Dalal Street. Trade tensions aren't helping either.
5. RBI Dividend – Big, But Not Big Enough
₹2.69 lakh cr payout is record-breaking—but fell short of the ₹3 lakh cr fantasy. Markets sulked.
Wrap-Up:
Sensex down 624 pts, Nifty off 175. Midcaps & smallcaps showed some fight—but today was all about volatility & valuation fears.
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The Indian stock market consolidated for the third consecutive week, but also snapped a two-week losing streak, driven by favourable domestic cues, instilling fresh confidence among D-Street investors. This, despite the ongoing trade tensions and uncertainty surrounding tariff negotiations. Next, investors will monitor some key market triggers in the second week of June. India's retail inflation, global tariff announcements, foreign capital flow, macroeconomic data, and global market cues will dictate the market direction. Domestic equity benchmarks Sensex and Nifty 50 were range-bound for most of the week, but surged on Friday to settle near the week's high. Supportive domestic developments helped limit the downside, with the highlight being the Reserve Bank of India (RBI)'s monetary policy, which took the market by surprise. The RBI cut the repo rate by 50 basis points to 5.50 per cent—double the market expectation—and reduced the Cash Reserve Ratio (CRR) by 100 basis points to three per cent, the lowest level since April 2021, further boosting market sentiment. This liquidity boost is expected to lower the cost of funding for banks and spur credit growth, powering rate-sensitive stocks. On Friday, the Nifty 50 logged its best day in three weeks and rose 252 points, reclaiming the psychologically crucial 25,000-mark after investors rallied behind the RBI's bumper policy measures. Sensex added 738 points to end at 82,189, while both indices gained one per cent for the week. The Bank Nifty outperformed, rising 1.5 per cent to settle at 56,578.40 after hitting a fresh all-time high of 56,695, extending its winning streak to four consecutive weeks. In the broader markets, both midcap and smallcap indices outperformed the benchmarks, reflecting a risk-on sentiment among investors, with gains ranging between 2.8 per cent and four per cent. In the coming week, the primary market will witness more action, with some new initial public offerings (IPO) and listings slated across the mainboard and small and medium enterprises (SME) segments. The week will be critical from the domestic and technical points of view. Investors will track domestic macroeconomic data, geopolitical events, and sector-specfic outcomes. Going forward, market participants will focus on key macroeconomic data for further cues. High-frequency indicators such as the consumer price index (CPI) inflation data and the index of industrial production (IIP) will be closely tracked to gauge demand trends and the central bank's next steps. Additionally, the progress of the monsoon and sowing patterns will be monitored due to their implications for rural consumption. 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According to Ionic Wealth by domestic brokerage Angel One, FIIs hold 18.8 per cent of Indian equities, compared to 30 per cent in other emerging markets (EMs), offering 'significant room for capital infusion'. Chemicals, telecom, and financials are the sectors attracting FIIs, driven by strong structural themes like the China+1 strategy. India's unique mix of consumption-led growth, robust capex cycles, and high-return-on-equity companies makes it a strong investment case. On the global front, developments in trade negotiations and movements in US bond yields will continue to influence investor sentiment. Global uncertainties and tariff-related risks could keep markets on edge and add to market volatility. According to market analysts, profit booking was visible last week due to the ongoing global uncertainty. Mid- and small caps outperformed large caps, driven by better earnings and valuations. 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