Sensex down 800 points: Why Indian stock market crashed today
What's the story
The Indian stock market witnessed a major selloff today, with the Sensex crashing over 800 points to hit an intraday low of 76,641.19. The Nifty 50 also fell below its crucial support level of 24,000, hitting an intraday low of 23,961.40. The mid- and small-cap segments also underperformed during this period. Here's a look at the factors contributing to this market slump.
Tariff impact
Trump's new tariffs on drugs affect market sentiment
US President Donald Trump's announcement of a 100% tariff on all generic drugs imported into the US from August 1, 2028, has affected market sentiment.
The tariff will be raised to 200% from the following year.
Additionally, US Trade Representative Jamieson Greer hinted at imminent new tariffs targeting dozens of countries as Trump's temporary global tariff regime is set to expire soon.
Conflict escalation
US-Iran conflict escalates, affecting oil prices
The ongoing US-Iran conflict is escalating, pushing oil prices higher and worsening macroeconomic conditions for major oil importers like India.
Iran's army has launched a large drone attack on what it calls US ammunition storage and logistics facilities in Al-Dawha, Kuwait.
The US military has also conducted strikes on Iran amid these tensions, further complicating the situation.
Economic pressures
Rising oil prices and weakening rupee add to inflation woes
Oil prices have risen for the fourth straight session, raising concerns of inflation and potential monetary tightening.
Crude oil benchmarks Brent crude rose to $92.67 a barrel, its highest since June 11 this year, amid the US-Iran conflict and fears of further energy supply disruptions.
Meanwhile, the Indian rupee weakened by 11p to 96.36 per dollar in early trade today.
Capital outflows
Foreign capital outflows from emerging markets like India likely
The rising US dollar and bond yields have increased the risk of further acceleration in foreign capital outflows from emerging markets like India.
The dollar index is above 101, while the US 10-year bond yield has risen to 4.635% from 4.545% in just four sessions.
These factors are likely to continue impacting the Indian stock market negatively in the near future.