Sensex Falls 511 Points, Nifty Drops Below 25,000 - Key Reasons Behind Market Decline On June 23

India's stock market started the week on a weak note, with the Sensex and Nifty both closing lower on Monday, June 23. While broader markets stayed firm, heavy selling in tech, auto, and banking stocks dragged down benchmark indices.

The Sensex dropped 511 points or 0.62% to close at 81,896.79, and the Nifty 50 slipped 141 points or 0.56% to end at 24,971.90, dipping below the key psychological mark of 25,000. The Nifty Bank index also ended lower, down 194 points at 56,059, as financial stocks felt the pressure.

In early trading, the Sensex fell more than 900 points, hitting a low of 81,476.76, while the Nifty hit an intraday low of 24,824.85 before recovering slightly.

Top Gainers And Losers:

Infosys, L&T, Hero MotoCorp, M&M, and HCL Technologies were among the top Nifty losers in today's trading session. While, Trent, Bharat Electronics, Hindalco Industries, Adani Enterprises, and Adani Ports were among top Nifty gainers.

Among the sectors, IT, FMCG, Auto, and Banking fell by 0.5% to 1.5%. On the other hand, Media, Metal, and Capital Goods sectors saw gains of 0.5% to 4%.

Unlike the benchmark indices, the broader markets showed strength. The Nifty Midcap 100 index rose 211 points to 58,207, supported by strong gains in defence, real estate, and industrial stocks.

The BSE Midcap and Smallcap indices also ended higher, rising 0.20% and 0.57% respectively. This helped keep the overall market capitalisation of BSE-listed firms steady at nearly Rs 448 lakh crore.

"The Nifty recovered significantly after a gap-down opening amid weak geopolitical sentiment. A pullback in crude oil prices helped the Indian market pare some of its morning losses, although it still ended on a negative note.

For the day, the Nifty managed to close above the support level of 24,850, and Indian equities may continue to offer buying opportunities as long as the Nifty sustains above this level. On the higher side, if it moves above 25,000, it may head towards 25,350 in the short term, said Rupak De, Cenior Technical Analyst at LKP Securities.

Key Reasons Behind Today's Fall:

1. Rising Tensions in the Middle East: Fresh tensions between Israel and Iran impacted global market sentiment. Over the weekend, the US launched strikes on three Iranian nuclear sites, raising fears of an extended conflict.
2. Risk to Global Oil Supply: Iran may close the Strait of Hormuz, a major route through which 20% of global oil passes. Any disruption here can push oil prices higher and disturb global energy supply.
3. Crude Oil Prices Near $80: Brent crude rose over 2% on Monday morning, touching $79 per barrel. Higher oil prices are bad for India, as they can increase inflation, raise import bills, and affect company profits. Meanwhile, the Indian rupee weakened by 17 paise to Rs 86.72 against the US dollar.
4. India's Growth Outlook Faces Global Pressure: Though India's economy is domestic-driven, it's not fully immune to global developments. With global conflicts rising and trade talks uncertain, experts believe India's growth could be affected too.

"Last Friday, markets buildup in anticipation of easing Middle East tensions, following the U.S. announcement of a two-week window to deliberate its involvement in the Israel-Iran conflict. However, the unexpected U.S. airstrike on Iran's nuclear facilities over the weekend disrupted those expectations, triggering a sharp rise in crude oil prices and leading to consolidation in the domestic equity market.

Despite the initial setback, the market recovered most of its losses, supported by gains in capital goods and metal stocks, as fears of an immediate oil supply disruption remained low. Meanwhile, IT stocks came under pressure due to uncertainty around global tech spending, exacerbated by weak earnings reported by Accenture," noted Vinod Nair, Head of Research, Geojit Investments.

Highlights of The day:

• Oil marketing companies (OMCs) and paint makers rose as crude oil prices cooled later in the day. Stocks like BPCL, Indian Oil, and Asian Paints ended higher.
• Defence stocks surged on strong domestic orders. Garden Reach Shipbuilders jumped 6%, and Ideaforge soared 10% after a Rs 147 crore defence order.
• NBCC (India) gained over 2% after securing a Rs
• 297 crore project.
• Zee Entertainment rallied nearly 11% on news that its streaming platform ZEE5 may break even by FY26.
• IndiGo (InterGlobe Aviation) rose over 1% amid reports of possible inclusion in the Nifty 50.
• Losers:
• IT stocks like Infosys fell after Accenture's weak results, pulling the Nifty IT index into the red.
• Auto stocks dropped due to concerns over increased costs after the government proposed making ABS mandatory for new two-wheelers.
• Diagnostic firms like Dr. Lal PathLabs fell 4% on reports of Amazon entering India's diagnostics space, raising fears of tough competition and pricing pressure.

Rupee VS Dollar:

Indian rupee closed 16 paise lower against US dollar at 86.75 per dollar on Monday as compared to Friday's close of 86.59.

"The Indian Rupee weakened 17 paise against the US Dollar, closing at 86.75-its lowest level since March 17. This depreciation stemmed from surging crude oil prices following US strikes on Iran's nuclear facilities, combined with a strengthening Dollar Index and weak domestic equity performance," Devarsh Vakil, Head of Prime Research, HDFC Securities.

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