Key Reasons Behind the Fall in Indian Markets on Monday

On Monday, Indian equity benchmark indices began the session on a stable note, supported by positive global cues. The Nifty 50 briefly moved above its 50-DMA, a level it had breached decisively in the previous session. However, the recovery could not hold as selling emerged at higher levels. The weakness deepened through the day, with the index breaking the previous day’s low and slipping below the 23,400 mark.

At close, the Nifty 50 settled at 23,382.60, down 0.70 per cent, extending losses for the fourth straight session. The Sensex declined 508.39 points, or 0.68 per cent, to close at 74,267.35, while the Bank Nifty ended lower by 1.10 per cent. The India VIX rose 2.16 per cent to 16.54, showing higher caution among traders.

Key Reasons Behind the Fall in Indian Markets on Monday, June 01

US-Iran tensions lifted crude oil prices

Renewed tensions between the US and Iran kept crude oil prices firm and weighed on sentiment. Reports emerged stating that the US struck Iranian military sites, while Iran’s Revolutionary Guards said they targeted a US base in response. For India, higher crude is a direct macro concern as it can raise import costs, pressure the rupee and revive inflation worries.

Weak monsoon forecast hit rural demand expectations

The IMD’s revised monsoon outlook added pressure on consumption-linked sectors. The weather department lowered its 2026 southwest monsoon forecast to 90 per cent of the Long Period Average, with a 60 per cent probability of deficient rainfall and an 84 per cent probability of below-normal or deficient rainfall. A weaker monsoon can affect rural income, food prices, agricultural output and demand for FMCG, tractors, two-wheelers, fertilisers and agrochemicals.

Auto sales data gave mixed signals

May auto sales did not offer a clean comfort signal for the market. While companies such as Maruti Suzuki, Hyundai Motor India and TVS Motor reported growth, investors focused on pockets of weakness and possible margin pressure. Ashok Leyland’s total sales fell 4 per cent YoY to 14,923 units, led by weakness in the M&HCV segment, while Escorts Kubota flagged rising input costs, softer cash crop prices and geopolitical developments as near-term headwinds ahead of the Kharif season.

India’s GST growth slowed in May after April’s record collection

India’s GST collections moderated in May after a strong April print. Gross GST collections stood at Rs 1.94 lakh crore in May 2026, up 3.2 per cent YoY, compared with April’s record Rs 2.42 lakh crore. Net GST revenue rose 3.3 per cent YoY to Rs 1.67 lakh crore, while refunds increased 2.6 per cent to Rs 27,281 crore, indicating slower growth in collections and keeping investors cautious on domestic demand.

Among the sectoral indices, Nifty FMCG emerged as a Top Losers ended lower by 2.3 per cent, while Nifty IT emerged as top gainer, advancing over 2.5 per cent on Monday.  

The weakness was visible beyond frontline indices. Out of 3,452 stocks traded on the NSE, 1,151 advanced, 2,202 declined and 99 remained unchanged. A total of 101 stocks touched their 52-week highs, while 74 hit 52-week lows. Additionally, 129 stocks were locked in Upper Circuits, while 189 stocks hit Lower Circuits, showing that selling pressure was broader than the index-level decline.

Disclaimer: The article is for informational purposes only and not investment advice.