Indian domestic indices saw sharp selling pressure in the intraday trade today (June 3). Both the benchmark indices slipped into the red.
At this hour, almost every major sector is trading lower.
In the intraday trade, the Sensex was trading at below 73,750, down over 900 points or 1.2%, while the Nifty had slipped to 23,250, declining 250 points or 1.08%.
Let’s take a look at the key reasons behind why the markets are falling today.
IT stocks trigger the biggest decline
The most significant pressure on the benchmarks came from information technology companies. The Nifty IT index tumbled more than 4%, making it one of the worst-performing sectoral indices at this hour.
Heavyweight technology stocks saw intense selling. TCS and LTM were among the biggest losers, each falling around 7%. Other major names including Persistent Systems, Coforge and Tech Mahindra declined about 5%, while Infosys and HCL Technologies dropped roughly 4%.
Geopolitical tension
Global developments also contributed to the weak mood on Dalal Street.
The ongoing concerns surrounding the Middle East resurfaced after fresh military activity involving Iran and the United States.
Although US President Donald Trump indicated that efforts were underway to restore stability and reopen the Strait of Hormuz, the situation remains uncertain.
Furthermore, continued military actions in the region have raised concerns about disruptions to global energy supplies and increased geopolitical risks.
Rising crude oil prices add to worries
The escalation in regional tension pushed crude oil prices higher. Brent crude traded close to $97 per barrel, while WTI crude moved near $95 per barrel.
The rise in oil prices is particularly important for India because the country imports a significant portion of its crude oil requirements.
Rupee weakness raises concerns
The Indian rupee weakened against the US dollar, adding another layer of concern for market participants.
“Higher crude prices continue to raise concerns over India’s import bill and inflation outlook, keeping sentiment cautious in the forex market,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.
“Going ahead, the market will closely track the RBI policy outcome, along with key US economic data including Non-Farm Payrolls and unemployment figures, which are expected to be major drivers for the dollar and emerging market currencies. Rupee movement will continue to be influenced by the dollar index, crude oil prices, and capital flows. Technically, 94.85 remains an important resistance level, while 95.75 is the next key support zone,” he added.
RBI policy and macro concerns in focus
Investors are also adopting a cautious stance ahead of the Reserve Bank of India’s upcoming monetary policy decision. Rising crude prices, pressure on the rupee and foreign fund flows have increased uncertainty over the near-term market outlook.
“The mild escalation in the West Asia conflict has again pushed up Brent crude price to close to $97 indicating no respite to India from the energy shock. Rupee has edged down to 95.26 to the dollar. The sustained fall in the rupee has been arrested for now but the rising current account deficit and sustained FPI outflows are areas of concern. The RBI commentary and actions on June 5th will be keenly watched by the market,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
Key laggards at this hour
TCS emerged as the biggest laggard in early trade, followed by Tech Mahindra, Infosys and HCL Technologies. Outside the technology space, ITC and Bajaj Finserv also traded lower, adding to the downward pressure.