Sensex plunges over 600 points today: Here we decode why
What's the story
The Indian stock market witnessed a major crash today, with the Sensex plummeting over 600 points or 0.74% to an intraday low of 81,393. The Nifty also followed suit, falling by 0.76% to hit a day's low of 24,893. The decline was mainly due to profit booking across sectors amid mixed global cues and caution ahead of US Fed Chair Jerome Powell's speech at the Jackson Hole symposium.
Performance
Mid- and small-cap segments resist fall
While the major indices took a hit, mid- and small-cap segments were not as badly affected. The BSE Midcap and Smallcap indices fell by up to 0.5% during the session. Around 1:00pm, Sensex was down by 545 points or 0.66% at 81,456, while Nifty was trading lower by 165 points or 0.66% at 24,919.
Correction
Profit booking after 6-day rally
The primary reason for today's fall is profit booking after a massive 1,800-point rally in Sensex. The index had been on a six-day winning streak from August 13 to August 21, its longest since late April. Despite a positive long-term market outlook, investors are cashing in on profits amid tariff-related uncertainty and weak earnings reports.
Market apprehensions
Global cues and tariff concerns weigh on market
The market is also worried about the impending risk of US President Donald Trump's tariffs. The second tranche of 25% tariffs will come into effect from August 27, taking the total duties on Indian goods to 50%. Meanwhile, global caution spilled over to domestic markets ahead of US Federal Reserve Chair Jerome Powell's speech at Jackson Hole.
Investor confidence
Weak Q1 earnings and rising crude oil prices hit market
Weak Q1 earnings from Indian companies have dented investor confidence in sectors like banking and IT, leading to profit booking. This has contributed to the "sell-on-rise" trend in the market. Further, escalating Russia-Ukraine tensions have raised crude oil prices by over 1%, which is bad news for India, one of the world's largest crude oil importers.