Sensex crashes nearly 1,200 pts from day’s high; key factors behind sudden market fall

Indian equity markets witnessed sharp volatility on Tuesday, with the BSE Sensex and NSE Nifty crashing over 1% in the final hour of day’s trade. The India VIX index, a measure of market volatility, rose over 3.5% to hit a six-month high of 17.44 level, indicating high degree of uncertainty among investors. The market witnessed broad-based selling with all sectoral indices slipping in negative zone, led by banking and metal stocks, as weak corporate earnings dented sentiments.

The sell-off in the market was also triggered after newly appointed U.S. President Donald Trump proposed to impose 25% tariffs on Mexico and Canada by February 1, dashing earlier hopes for a delay in tariff decisions. The market will keep a close eye on Trump’s trade policies which will be key trigger for local currency movement and foreign fund flows.

During the session so far, the 30-share Sensex declined as much as 936 points, or 1.2% to hit a low of 76,138. Similarly, the Nifty50 dropped 234 points, or 1%, to touch an intraday low of 23,345. The broader markets were the worst hit, with the BSE midcap and smallcap indices falling up to 1.5% each.

Early today, the BSE benchmark Sensex opened higher for the second straight session at 77,262, and the Nifty50 belled the day at 23,422 levels. However, the equity benchmarks failed to hold early gains and slipped into negative terrain, falling as much as 1,200 points and 315 points, respectively, intraday.

At 2:20 PM, the Sensex was down 708 points at 76,365, and the Nifty lost 184 points to 23,160. The top losers on the Sensex pack were Zomato, Trent, Jio Financial Services, Adani Ports, and ICICI Bank. 24 out of 30 Sensex constituents were reeling under stress, barring UltraTech, HCL Tech, HUL, ITC, Nestle India, and Infosys. The total market capitalisation of the BSE-listed companies dropped by ₹6.2 lakh crore to ₹426.68 lakh crore.

The Sensex heavyweights RIL declined nearly 2%, while the second most valued stock, TCS, dropped up to 0.5%.

Among individual stocks, foodtech heavyweight Zomato was the worst performer with a 10% fall as investors thumbs down its weak December quarter earnings.

On the global front, shares in Asia-Pacific region were trading flat, paring most of early gains. Japan’s Nikkei 225 was up 0.3%, Hong Kong’s Hang Seng added 0.9%, while China’s Shanghai Composite was down in red with marginal losses. Among others, South Korea’s KOSPI also slipped into negative terrain.

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