Sensex crashes 800 pts, Nifty below 24,900: Renewed tariff threat among key factors behind market decline

Sensex and Nifty began the trade with modest gains on June 12.

The equity benchmark indices pared early gains and slipped into the red on Thursday, with the Sensex and the Nifty falling over 1 percent, amid weak global cues and renewed tariff-related concerns.

Sensex dropped 823.16 points or 1 percent to settle at 81,691.98. During the day, it plunged 991.98 points or 1.2 percent to 81,523.16. The broader Nifty tumbled 253.20 points or 1.01 percent to 24,888.20.

Infosys, Eternal, Tech Mahindra and Tata Motors were among the major laggards in early deals.

Key factors behind market decline:

1) Renewed tariff threat: US President Donald Trump said he planned to send letters to trading partners in the next one to two weeks outlining unilateral tariff rates, ahead of a July 9 deadline to reimpose higher duties. "At a certain point, we’re just going to send letters out... saying this is the deal, you can take it or leave it," Trump said in Washington. So far, only the UK has reached a trade framework with the US, along with a temporary tariff truce with China.

2) Tensions in the Middle East: The US is on high alert over the possibility of an Israeli strike on Iran. The State Department has authorised evacuation of some personnel from Iraq, and the Pentagon has approved the departure of military family members from various Middle East locations.

Israel fully ready to launch operation in Iran: Sources

3) FII Selling: Foreign Institutional Investors (FIIs) sold shares worth Rs 446.31 crore on Wednesday, adding pressure on domestic markets.

4) Weak global cues: Key Asian indices such as Shanghai’s SSE Composite, Japan’s Nikkei 225 and Hong Kong’s Hang Seng were all trading lower, down up to 1 percent. US markets closed lower on Wednesday, and Wall Street Futures were also in the red on Thursday. European markets were also down with Germany's Dax falling 1.2 percent. Dow Futures shed 0.5 percent.

Stock Market LIVE Updates

5) Rising crude oil prices: Crude futures surged over 4 percent on Wednesday amid growing US-Iran tensions. Brent crude jumped $2.90 (4.3%) to close at $69.77 a barrel, while US West Texas Intermediate rose $3.17 (4.9%) to settle at $68.15.

6) Rise in India VIX: The volatility index, India VIX, rose over 3 percent to 14.14, reflecting heightened investor nervousness in the market.

Technical view:

Anand James, Chief Market Strategist at Geojit Financial Services, said, "We are inclined to believe that the medium-term objectives of 25,460–26,200 continue to be in play, and upswings will unfold in the near term, as long as dips do not stretch beyond 25,056. Alternatively, a direct fall below 24,900/863 could signal weakness, though we prefer to see past 24,640 before switching sides."

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.