STOCK MARKET BIG PICTURE IN JUNE 2026

STOCK MARKET BIG PICTURE IN JUNE 2026

The markets showed signs of restrained optimism as there were clear signals that the US and Iran were moving towards genuine and workable long-term peace.

Let us start with generic indices in June 2026. The month of June saw a much sharper recovery in smaller stocks. For June; Nifty 50 gained (1.67%), Nifty Mid-Cap 100 (0.19%), Nifty Small Cap 100 (4.07%), and Nifty Micro Cap (6.41%)

Sectoral indices were a mixed bag in June 2026. Sectoral starts for June were NBFC (8.9%), Logistics (7.9%), Retail (7.1%), and Consumer Services (7.0%). Big losers were IT (-9.6%), Metals (6.5%), and Power (-4.4%). Bulk of sectors gave positive returns.

Even the strategy indices worked both ways in June 2026. Strategies that showed stellar performance were Momentum Quality, Equal Weight, and Alpha Low-Volatility. The strategies that lagged in June were Dividend Opportunities, Value, and Multi-Factor.

What about Thematic Indices in June 2026? Star themes for June in terms of returns were; Tourism, IPOs, Microfinance, New Age Consumption, and Defence. Themes that lagged were; Commodities, CPSE, and Indian Railways driven stocks.

It still seems to be a rather double-edged markets as it reconciles with the new global macro reality. However, sectors like defence and healthcare have been attracting consistent interest in terms of clustered buying.

HOW SECTORAL INDICES FARED ON RETURNS IN LAST 1 YEAR?

The table captures the returns on 25 key sectors with ranking on 1-year returns.

Data Source: NSE Indices

There are interesting takeaways from sectoral returns analysis

The last one year has been a year of mixed performance with 11 out of 25 key sectors giving positive returns and 14 sectors giving negative returns. While Metals, Telecom, PSU Banks and Pharma were the best performers; IT, Realty, and Media lagged.

If we take a longer-term 5-year view; the best performers based on CAGR returns were Capital Markets, Metals, and PSU Banks. On the downside, IT has been flat over 5 years, while Insurance, Housing Finance, Chemicals, and FMCG gave single-digit returns.

Capital Markets and PSU banks hav gained from structural shift amid greater financial inclusion. Metals has been more a commodity play amidst global macro uncertainty. It is the so-called defensives that have actually lagged during the last 5 years.

Let us now take a look at the risk aspect of sectoral indices.

HOW SECTORAL INDICES FARED ON RISK IN LAST 1 YEAR?

Returns are one side of the coin. Risk is the other side of the coin for investors.

Data Source: NSE Indices

The above table is ranked on 1-year volatility (standard deviation of returns) starting with the most volatile sectors to the least volatile sectors.

What about volatility / return correlation? Realty and IT have not justified the higher volatility in prices; but NBFCs, PSU Banks and metals have managed to justify the higher volatility risk in last 1 year, in the form of commensurately higher returns.

Over the last one year, 17 out of 25 sectors were aggressive sectors with Beta ≥ 1. Pharma and Healthcare have generated best defensive risk-adjusted returns, while the rest of the defensive plays have generated below-average returns.

R-Squared shows how much sector returns are explained by Nifty movements. Lower the R-Squared, better for diversification. The diversification ideas in the last 1 year were IT and Healthcare. In fact, healthcare has offered diversification with outperformance.

Let us finally turn to how valuations of various sectors stack up?

SECTORAL INDICES AND THE VALUATION PLAY IN LAST 1 YEAR

Here, we look at sectoral valuations ranked on P/E ratios as of June 2026.

Data Source: NSE Indices

Here are key takeaways from the valuation parameters.

There is not necessarily a connect between valuation ratios and returns. In the case of consumer services and retail, the net impact of the sector is a loss, so P/Es are not applicable. Yet returns are under pressure. The disconnect is increasing across.

PSU banks and Oil & Gas are still trading at single-digit P/E ratios. The P/E ratios of IT and Private Banks are sharply lower than their 10-year averages. Chemicals and Capital Goods are already struggling to justify their steep valuations after the recent rally.

The sharp sell-off in IT has made this sector very attractive in terms of dividend yield at 3.48%. However, such generous dividend yields have been matched by a fall in the P/E discounting assigned to IT sector. Oil & gas is the other sector with high dividend yields, while the dividend yields of metals and PSU banks have tapered amidst the rally.

Healthcare is possibly checking multiple boxes. Returns are attractive, volatility is low and the low R-Squared also makes it a solid candidate for diversifying the portfolio.