Sensex slumps nearly 800 points: Why is the stock market falling today?
Equity benchmarks slipped sharply in early trade on Tuesday, erasing gains from the previous session as investors turned cautious amid global uncertainty and profit booking.At 9:29 AM, the BSE Sensex was down 752 points at 81,424, while the NSE Nifty50 dropped 209 points to 24,792. Broader market indices also faced selling pressure, with heightened volatility dragging down sentiment across the board. Banking, IT, and financial services were among the worst-hit sectors.advertisementWHAT TRIGGERED THE MARKET DROP?A surge in Covid-19 cases has reignited fears of economic disruption, prompting a risk-off mood among investors. The spike comes just as markets were attempting to consolidate after a strong run-up. While no single factor is solely responsible, the rise in infections, weak cues from Asian markets, and a round of profit booking all appear to be weighing on sentiment.Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said the market may be entering a consolidation phase. 'High valuations are prompting selling on rallies, while any dip will likely be bought into, given that mutual funds are sitting on ample cash,' he noted.
He added that a sustained upward move is unlikely without clear signs of a pickup in earnings growth, which is something that remains a few quarters away. However, he pointed to 'slow accumulation in rate-sensitive sectors like autos,' anticipating rate cuts as inflation continues to moderate.Vijayakumar added that one positive trend is that Systematic Investment Plan (SIP) flows remain strong, with retail investors staying invested longer than in the past—providing a degree of underlying support to the market.GLOBAL FACTORS AT PLAYDevarsh Vakil, Head of Prime Research at HDFC Securities, pointed to losses in Chinese and Hong Kong equities as another headwind. 'Automobile shares fell on renewed price war concerns, and Apple suppliers declined amid fears of fresh US tariffs,' he said.advertisementBack home, sentiment had been buoyed in recent days by positive cues — including US President Donald Trump's decision to delay additional tariffs on the European Union and optimistic forecasts for India's monsoon season. But with those factors now priced in, markets seem to be adjusting.Technically, the Nifty appears to have broken out of its recent consolidation between 24,500 and 25,000. Resistance is seen at 25,207, the 76.4% Fibonacci retracement of the drop from 26,277 to 21,743. On the downside, immediate support is expected near 24,800.Tune InMust Watch
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