Sensex +0.52%, Nifty IT +4.23% June 2 Market Close

IT Dragged Indian Markets Back From the Brink on June 2 — But the MPC Week Has Just Begun

The BSE Sensex closed at 74,649.84 on Monday, June 2, 2026, up 382 points or 0.52%, after spending much of the session deep in the red. The Nifty 50 settled at 23,483.55, gaining 0.43%, in what was a recovery shaped almost entirely by one sector: technology. Nifty IT surged 4.23%, closing at 31,116.55, its third consecutive day of gains and the sharpest single-session move the index has logged in months. Without that cushion, the broader indices would have ended meaningfully lower — Middle East tensions and crude oil above $110 a barrel had done enough damage to banking, pharma, and power stocks to ensure that.

The week ahead carries its own weight. The Reserve Bank of India's Monetary Policy Committee convenes June 3-5, with a decision widely expected on Friday morning. Investors will also get India's services PMI on June 4 and the first official GDP print for FY26 on June 7. None of these are routine data points, and the market's mood heading into each will depend significantly on how oil prices and the rupee behave in the interim.

Why IT Staged a 4.23% Rally While Everything Else Struggled

Four forces converged to push technology stocks sharply higher on June 2.

Snowflake's Earnings Shifted AI Sentiment

Snowflake reported first-quarter FY2027 product revenue of $1.33 billion — 34% year-on-year growth — citing AI as a clear demand accelerator. The company noted that customers were migrating to its platform "with increasing urgency," and 779 accounts now spend more than $1 million annually on a trailing basis. For Indian IT investors, this matters because TCS, Infosys, Wipro, and HCL Technologies derive a growing share of incremental deal flow from AI implementation projects for global enterprises. A strong Snowflake print signals that cloud and AI budgets remain intact, directly feeding the revenue pipeline for large Indian IT services firms.

The Rupee's Double Edge

The Indian rupee hit fresh lows against the US dollar during the session, with some estimates placing it near 96.88. For export-oriented IT companies that bill in dollars and pay costs in rupees, this is an earnings tailwind. A weaker rupee mechanically boosts rupee-denominated revenue and margins when dollar revenues are converted. Analysts at HDFC Sky noted that the combination of AI optimism and currency tailwind had made the sector's risk-reward profile look attractive again after months of underperformance relative to broader indices.

Valuation Recovery After a Prolonged Correction

Nifty IT had already gained 2.66% on June 1, meaning Monday's 4.23% move extended a streak rather than starting one. The sector had lagged badly through April and much of May, weighed down by uncertainty over US visa policies, early-cycle nervousness about GenAI cannibalising IT services, and a cautious macro backdrop. As those concerns began to ease — particularly as US rate-cut expectations firmed — money rotated back into a sector that many institutional desks considered oversold.

Stock-Specific Moves

TCS closed up 6.69% and Infosys gained 5.61%, making the two heavyweights the primary engines of the sectoral move. HCL Technologies added 4.17% and Wipro gained 1.79%. Adani Enterprises also closed 2.15% higher, though its move appeared more idiosyncratic than sector-driven.

Top Nifty 50 Movers on June 2

Gainers

Stock	Change (%)	Notes
TCS	+6.69%	AI/dollar tailwind
Infosys	+5.61%	AI/dollar tailwind
HCL Technologies	+4.17%	Rode IT sector rally
Adani Enterprises	+2.15%	Broad recovery
Wipro	+1.79%	IT sector momentum

Losers

Stock	Change (%)	Notes
NTPC	-2.98%	Power sector sold off; OFS overhang
Axis Bank	-1.76%	Banking pressure, rate uncertainty
Power Grid Corporation	-1.45%	Continues power sector weakness
HDFC Life Insurance	-1.22%	Defensive sell-off
Dr. Reddy's Laboratories	-1.04%	Pharma sector under pressure

Source: NSE India; Upstox market wrap, June 2, 2026.

NTPC's slide followed news of an OFS (Offer for Sale) by the government at an 8% discount — a dilution overhang that triggered selling in both NTPC and NHPC. The power sector's broader weakness reflects a rotation out of defensives as technology stocks attract fresh institutional interest.

Sectoral Scorecard

Sectoral Index	Approx. Move	Direction
Nifty IT	+4.23%	Strong gain
Nifty Metal	+0.05%	Flat
Nifty Auto	Marginal positive	Modest gain
Nifty FMCG	Marginal positive	Modest gain
Nifty Bank	+0.14%	Narrow gain
Nifty Pharma	-1.17%	Decline
Nifty Healthcare	Negative	Decline
Nifty Financial Services	Negative	Decline

Mid/small-cap IT and Telecom indices gained approximately 2%, confirming the breadth of the technology rally beyond just the large-cap names.

Sources: Business Standard sectoral wrap; HDFCSky sectoral snapshot, June 2, 2026.

Oil, the Rupee, and the Middle East Overhang

India imports over 85% of its crude oil. With Brent trading above $110 a barrel and the rupee under pressure, the fiscal arithmetic deteriorates rapidly. Rising crude increases India's import bill in dollar terms; a falling rupee makes each of those dollars more expensive to acquire. The dual compression — costlier oil and a weaker currency — typically translates into wider current account deficit estimates, imported inflation, and pressure on consumption-facing sectors.

Middle East tensions remained a live risk factor. Fears that diplomatic talks between the US and Iran had broken down drove intraday selling early in the session, with the Sensex falling sharply before stabilising once US President Trump indicated negotiations were still ongoing. Gulf News reported that the Iran war risk had "pushed oil prices higher and spooked India markets," reflecting a pattern that has recurred through much of May. Intraday lows on June 2 had the Sensex closer to 74,267 before the IT-led recovery took hold.

The rupee's weakness is a two-sided coin. It benefits exporters — IT, pharma-generics, textiles — but it compresses margins for import-dependent sectors including auto components, electronics manufacturing, and energy. The Nifty Auto index's modest gain on June 2, despite the oil headwind, may partly reflect optimism around May passenger vehicle sales data, which showed resilience.

FII Selling Persists, DIIs Absorb

Foreign Institutional Investors (FIIs) remained net sellers in the cash segment on June 2, provisionally offloading approximately ₹8,363 crore in equities, according to data aggregated by Trendlyne and NiftyTrader. Domestic Institutional Investors (DIIs) continued to act as the primary absorption mechanism, having bought approximately ₹5,109 crore net on June 1, with provisional June 2 data pointing to continued buying.

This FII-DII dynamic has been a feature of Indian markets for several weeks. FIIs have been sellers partly on account of global risk-off sentiment around crude oil and geopolitical disruption, while DIIs — primarily domestic mutual funds fuelled by steady SIP inflows — have cushioned index falls. The pattern means that while FII selling limits upside, it has not triggered sharp sustained drawdowns.

The broader context: FIIs sold derivatives aggressively on June 2 as well, with provisional F&O data showing selling in index futures alongside call-writing. This positioning suggests hedged or moderately bearish foreign money, not full-scale exit.

MPC Week: What Markets Are Pricing In

The RBI Monetary Policy Committee, chaired by Governor Sanjay Malhotra, begins its three-day deliberation on June 3, with the resolution due Friday June 5 at approximately 10:00 AM IST, followed by a press conference at noon.

The Consensus: Hold at 5.25%

The repo rate currently stands at 5.25%, unchanged since April's MPC meeting. The near-consensus among economists — including SBI Research and ICRA — is that the committee will hold again in June. The case for holding rests on several pillars:

Inflation above comfort zone. SBI Research projects the inflation trajectory to stay above 5% for the next few quarters, driven by higher crude prices and currency depreciation. The RBI's own FY27 inflation projection stood at 4.6% as of April, but the oil shock since then complicates that estimate.
Currency stability. A rate cut at a time of rupee weakness could accelerate capital outflows, putting further pressure on the exchange rate. The RBI is unlikely to move in a way that amplifies existing currency stress.
Growth still firm. Manufacturing PMI came in at 55 in May 2026, up from 54.7 in April, suggesting industrial activity remains above the expansion threshold. With growth not requiring emergency support, the case for a preemptive cut is weak.

What the Market Wants to Hear

Even if the rate stays unchanged, markets will parse the accompanying statement carefully. A dovish-tilting statement — one that flags lower future inflation risks, acknowledges global headwinds, or opens space for a cut in the August meeting — would likely be received positively by bond markets and rate-sensitive equity sectors (banks, NBFCs, realty). A hawkish-leaning hold, citing persistent inflation and oil risks, could weigh on those sectors even without a rate change.

The Business Standard economic calendar for the week notes that India-US trade talks are also running concurrently, adding another variable to the policy backdrop.

What to Watch

June 3 (Tuesday): RBI MPC Day 1. No announcement, but rupee and bond market moves through the day will signal how traders are positioned ahead of Friday's decision. Watch the 10-year G-Sec yield — any significant move above or below the 6.8% area would indicate shifting rate expectations.
June 4 (Wednesday): India Services PMI. India's manufacturing PMI for May came in at 55; the services print will be crucial since services account for a larger share of GDP growth. A reading above 58 (April was reportedly strong) would reinforce the hold-with-optimism narrative at the MPC. A sharp drop would complicate the picture.
June 5 (Friday): MPC Decision at 10 AM IST. The rate announcement itself matters less than the tone. Watch for language around the inflation trajectory, oil price assumptions, and whether the committee's stance shifts from "neutral" toward anything more directional.
June 7 (Saturday): FY26 GDP First Advance Estimate. This is the first official GDP print for the full financial year 2025-26. Analysts broadly expect growth in the 7.0–7.4% range. A print at the upper end would bolster sentiment; a miss would revive concerns about whether India's growth premium justifies current equity valuations.
Crude oil and the rupee daily. With Brent above $110, every $5 move in either direction carries downstream effects for India's current account, inflation, and market sentiment. Monitor OPEC+ statements and any developments in US-Iran diplomatic talks closely.
IT sector sustainability. The Nifty IT index has now gained on three consecutive sessions. Watch whether large-cap IT stocks hold gains or give back ground as MPC uncertainty weighs on broader sentiment. The sector's dollar-revenue hedge is real but not unlimited — if oil disruption leads to global demand destruction, IT order flows can be affected over a longer horizon.
FII provisional data (daily post 6:30 PM IST). NSE India and BSE publish provisional FII/DII figures after close. A reversal toward FII buying would signal a shift in institutional confidence that could drive a broader market recovery.

Sensex Climbs 382 on June 2 as Nifty IT Surges 4.23% Into MPC