Share Market Crash / Market investors suffered a loss of 21.73 crores, 2.39 lakh crores lost due to 6 reasons

Share Market Crash: The stock market has suffered a major setback for the second consecutive trading day in the month of June. On June 3, 2025, the Bombay Stock Exchange (BSE) major index Sensex fell 636.24 points or 0.78% to close at 80,737.51. At the same time, the Nifty 50 index of the National Stock Exchange (NSE) also fell 174.10 points or 0.70% to 24,542.50. This decline caused a loss of about Rs 2.39 lakh crore to 21.73 crore investors of the country.

Main reasons behind the decline

There are many domestic and global reasons behind this big decline in the stock market. The main reasons among these are-

1. Re-emergence of global trade tensions

Former US President Donald Trump has announced to increase the tariff on imported steel and aluminum by 50%, which will come into effect from June 4, 2025. This move has a direct impact on Indian metal exporters, including major names like Tata Steel, Hindalco and JSW Steel.

India exported about $4.5 billion worth of these metals to the US in FY25, which now seems to be in danger. This decision is making the global trade environment uncertain and negatively impacting investor sentiment.

2. Weak global economic indicators

Recent global data is also pointing to an economic slowdown. Manufacturing in the US has been in decline for the third consecutive month, while factory activity in China has declined for the first time in eight months. This makes it clear that tariff policies are affecting global demand and supply chains.

This affected the US markets as well as Asian markets, causing indices like Nasdaq and S&P 500 to fall in early trade.

3. Caution ahead of RBI policy

Indian investors are awaiting the decision of the RBI Monetary Policy Committee (MPC) meeting to be held this week. While a 25 basis point rate cut is expected, uncertainty remains over the future path. Due to this, there was a sell-off in the stocks of banking, financial, auto and consumer sectors.

The Nifty Bank and Financial index fell by about 0.8%, while auto and FMCG stocks fell by 0.5%.

4. US bond yield jump

The ongoing debate on the $3.8 trillion spending bill in the US and the already $36.2 trillion federal loan have further increased the market's concern. This has brought the long-term bond yield to around the 5% level.

The rise in bond yield reduces the attractiveness of the equity market, as investors turn to relatively safer options.

5. Volatility in crude oil prices

Oil prices remain volatile after OPEC+ decided to increase production only limitedly in July. Brent crude is trading at around $64.58/barrel and WTI at $62.46/barrel.

Rising crude oil prices increase inflationary pressure on import-dependent economies like India, creating a negative sentiment in the market.

6. Uncertainty over Fed interest rates

Federal Reserve Governor Christopher Waller has raised the possibility of a rate cut, but no clear timeline has been given so far. This has increased uncertainty in the market. Investors are pricing in a 75% chance of a rate cut in September, but volatility remains due to the lack of concrete guidance.