Sensex Plunges 1,097 Points After Weak Monsoon Forecast Dampens Market Sentiment

MUMBAI, May 30: Equity markets witnessed sharp selling on Friday after concerns over a weaker than expected monsoon outlook rattled investor sentiment. The BSE Sensex plunged nearly 1,100 points, or 1.4 per cent, to settle at 74,776, with heavyweights from the banking and energy sectors leading the decline.

Among the biggest contributors to the downturn were HDFC Bank, ICICI Bank and Reliance Industries, according to exchange data. Selling pressure intensified during the final hour of trading as investors adjusted portfolios following the rebalancing of the MSCI Emerging Markets Index.

The steep fall came despite supportive external factors, including a stronger rupee and softer crude oil prices. In recent months, domestic equities have largely tracked currency movements and energy prices amid heightened geopolitical tensions in West Asia.

Market participants turned cautious after weather forecasts indicated rainfall could remain below normal this season. Analysts warned that inadequate precipitation, combined with the growing possibility of an El Niño pattern, could push food prices higher and complicate the inflation outlook.

Vinod Nair of Geojit Investments said concerns over rainfall deficiency have raised fears of inflationary pressures in the months ahead. However, he noted that easing crude oil prices and moderating bond yields could help cushion some of the downside risks.

Global cues remained broadly positive as optimism over a possible diplomatic breakthrough between Iran and the United States supported international markets. Nevertheless, domestic concerns overshadowed the favourable external environment.

Investors are now expected to closely monitor the Reserve Bank of India’s monetary policy decision and the release of GDP growth data, both scheduled for June 5, for further direction on market trends.