KKN Gurugram Desk | The stock market witnessed a massive shake-up on June 3, 2025, as both Sensex and Nifty saw sharp declines. Around 1:00 PM, Sensex dropped by 750 points and Nifty by 200 points, leading to a significant loss in market value. As of the latest data, the Sensex stands at 80,644.56 and Nifty at 24,521.10, reflecting a sharp decline in investor sentiment. Among the BSE Top 30 stocks, only Mahindra & Mahindra showed some positive movement, while the other 29 stocks plummeted. The Adani Port stock, in particular, saw the largest drop of 2.54%.

Reasons for the Stock Market Crash

The steep fall in the Indian stock market today is primarily attributed to the following factors:

1. Pressure on Midcap, Smallcap, and Nifty Bank Stocks

The biggest contributor to the market downturn has been the significant pressure in midcap, smallcap, and Nifty Bank stocks. Midcap stocks, including YES Bank, Ola Electric, and Suzlon Energy, faced the sharpest declines of up to 10%, 7%, and 4%, respectively. Additionally, Reliance Power and IFCI saw a drop of 4.57% and 3.07% in the smallcap segment. Large-cap stocks, including ICICI Prudential, Adani Port, and Adani Energy, saw drops of around 3.37%, 2.5%, and 2.26%, respectively.

2. Profit Booking by Investors in IT Stocks

Another contributing factor to the market decline has been the sell-off in IT stocks. Investors, who have seen significant gains in the IT sector, have opted to book profits, leading to a sharp drop in IT-related stocks. With global economic concerns, the pressure on these stocks has become more intense, causing further volatility in the market.

3. Impact of U.S. Investigations into Adani Group

The Adani Group, one of the largest conglomerates in India, has faced significant scrutiny in recent times. The U.S. Securities and Exchange Commission (SEC) has started an investigation into Adani’s dealings related to Iranian Petroleum. This investigation has raised concerns about the company’s future, resulting in a sharp fall in its stock prices. Adani Ports, Adani Energy, and other related stocks have seen a substantial drop due to this development.

Impact on Investor Wealth: Market Capitalization Plummets

The stock market crash has taken a toll on investors’ wealth. The BSE market capitalization, which stood at ₹445.50 lakh crore yesterday, has dropped by approximately ₹2 lakh crore, now standing at ₹443.52 lakh crore. This fall in market capitalization reflects the broader sentiment of uncertainty prevailing in the market and is an indication of the increasing concerns among investors.

Stock Declines: Key Stocks that Suffered

Midcap Stocks

• YES Bank: -10%

• Ola Electric: -7%

• Suzlon Energy: -4%

Smallcap Stocks

• Reliance Power: -4.57%

• IFCI: -3.07%

• IDBI Bank: -3%

Large-cap Stocks

• ICICI Prudential: -3.37%

• Adani Port: -2.5%

• Adani Energy: -2.26%

Market Activity at a Glance

• Out of the 4,055 BSE stocks, 1,732 stocks showed an upward movement.

• Meanwhile, 2,165 stocks were in the red, and 158 stocks remained unchanged.

• 237 stocks were in the upper circuit limit, while 201 stocks were in the lower circuit.

• 98 stocks traded at their 52-week highs, while 28 stocks hit their 52-week lows.

Why Did the Stock Market Crash Today?

The primary reasons behind the market’s drastic fall are:

Global Tariff Pressures

International market conditions, especially concerns around global tariffs and trade policies, played a major role in today’s market crash. The global financial ecosystem’s instability, compounded by rising geopolitical tensions, led to investors pulling back their funds from riskier assets.

Heavy Losses in Midcap and IT Stocks

The ongoing pressure on midcap and IT stocks, combined with a profit-booking phase, led to a significant drop in overall market performance. Investors, worried about potential future losses, chose to sell their holdings, further exacerbating the market downturn.

Adani Group’s Regulatory Scrutiny

The investigation into Adani Group’s financial dealings, especially concerning Iranian Petroleum, has caused deep concerns regarding its stock stability. The negative sentiment surrounding the group has led to significant declines in its stock prices and created ripples across the broader market.

Investors’ Response to the Stock Market Crash

• Profit Booking: Many investors in the IT and Midcap sectors have opted to liquidate their positions, especially after a prolonged rally in these sectors.

• Geopolitical Concerns: Investors are also concerned about the growing geopolitical uncertainties, with some global trade disruptions further influencing their decisions to pull back from risk-heavy stocks.

• Adani Group Scrutiny: The probe into Adani has led to panic selling among investors holding related stocks, further impacting the broader market.

Impact on Market Capitalization and Investment Sentiment

The market capitalization drop of ₹2 lakh crore has deeply affected investor sentiment. As a result of the sharp declines in share prices, many retail investors, who had seen steady growth in recent years, are now facing significant losses.

What Can Investors Expect in the Coming Days?

While the market faces a short-term setback, long-term investors are advised to stay calm and assess the situation carefully. The reasons behind the current market turmoil—especially the pressure on specific sectors like IT, Adani Group’s regulatory scrutiny, and the midcap sector—are expected to stabilize over time. However, the broader global economic challenges and trade uncertainties could continue to impact market sentiment in the short term.

Today’s crash in the stock market has shaken investor confidence, especially in midcap, IT, and Adani Group stocks. With Sensex and Nifty facing major declines, investors are left wondering whether this is a short-term correction or the beginning of a larger downward trend. While the immediate future looks uncertain, the recovery will depend on the resolution of geopolitical issues, the stabilization of the Adani Group’s regulatory challenges, and the easing of global tariff pressures.

In the meantime, investors are advised to remain cautious and stay informed, as market conditions continue to evolve. The need for diversification, risk assessment, and awareness of global trends is now more critical than ever in the volatile stock market environment.