Sensex crashes 800 points; Nifty 50 nears 24,500: Why is Indian stock market falling? EXPLAINED
Indian stock market witnessed a sharp selloff in the morning session on Monday, June 2, with the Sensex crashing almost 800 points and the Nifty 50 nearing 24,500 on the downside.
The Sensex opened at 81,214.42 against its previous close of 81,451.01 and dropped 797 points, or nearly 1 per cent, to an intraday low of 80,654.26. The Nifty 50 started its day at 24,669.70 against its previous close of 24,750.70 and dropped 0.91 per cent to an intraday low of 24,526.15.
However, the BSE Midcap and Smallcap indices exhibited resilience, rising about 0.30 per cent each, in the morning session.
Why is the Indian stock market falling today?
1. Trump’s tariff jolt
US President Donald Trump on Friday threatened to double tariffs on imported steel and aluminium to 50 per cent from June 4. The fresh tariff jolt shook up markets globally. Major Asian markets, including Japan’s Nikkei and Hong Kong’s Hang Seng, dropped 1-2 per cent.
According to VK Vijayakumar, Chief Investment Strategist, Geojit Investments, Trump’s 50 per cent tariffs on steel and aluminium are a clear message that the tariff and trade scenario will continue to be uncertain and turbulent and keep impacting markets.
Meanwhile, simmering trade tensions between the US and China also weighed on sentiment. Bloomberg reported that “China has accused the US of violating their recent trade deal and vowed to take measures to defend its interests.”
2. Profit booking in select heavyweights
Market experts pointed out that investors appear to be booking profits in select heavyweights, including HDFC Bank and Reliance Industries, which is keeping the benchmark indices down.
Retail investors seem to be shifting money from large-caps to mid and small-cap segments amid earnings growth.
“The recent rally in mid and small-cap stocks has been significantly supported by retail and HNI participation, evident from surging volumes and mutual fund inflows into small-cap schemes,” said Vinit Bolinjkar, Head of Research at Ventura.
“However, it is not just retail froth—there is genuine earnings growth in many companies, especially those linked to manufacturing, defence, railways, and infrastructure,” Bolinjkar said.
3. FPI buying losing steam
Foreign portfolio investors (FPIs) have reduced their buying of Indian equities, which is weighing on the markets. Data show that FPIs sold Indian equities worth ₹6,449.74 crore in the cash segment in the previous session.
A fresh uptick in the dollar index and stretched valuations of Indian equities could be the reasons behind FPI buying losing steam.
(This is a developing story. Please check back for fresh updates.)
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