Sensex crashes over 600 points: What's dragging Indian stock market?
What's the story
The Indian stock market has been on a downward trend since late June, due to tariff-related concerns, disappointing earnings, stretched valuations, and heavy foreign capital outflows. On Friday, the benchmark index Sensex fell over 600 points or nearly 0.80%, hitting an intraday low of 79,989.50. The Nifty 50 index also witnessed a similar fall in its value during the trading session. The NSE counterpart dropped by nearly 0.80% to hit the day's low of 24,402.
Market impact
Midcap and smallcap indices also decline
The selloff wasn't limited to the main indices. The BSE Midcap index fell by 1% while the Smallcap index declined by half a percent. At around 1:27pm Sensex was down 551.28 points or 0.68% at 80,071.98, and Nifty was down by 168.25 points or 0.68% at 24,427.90. Both were on track for their sixth consecutive week of losses.
Market analysis
Factors contributing to recent slump
The Indian stock market's downward trend began in the last week of June, after a 3% rise earlier in the month. The Nifty 50 index fell by 3% in July and has already lost over a percent this month. Experts have pointed out several factors contributing to the recent slump, including tariff-related concerns, disappointing earnings reports from companies, stretched valuations of stocks, and heavy foreign capital outflows.
Tariff concerns
US tariffs on Indian imports raise concerns in market
The 50% tariff imposed by US President Donald Trump on Indian imports has raised concerns in the market. While it is believed that the tariffs will mainly affect export-oriented sectors such as textiles and gems, and jewelry, some analysts fear they could significantly damage India's economy. Bloomberg Economics estimates these tariffs could cut exports to the US by 60% and shrink India's GDP by about 1%.