Why is the stock market declining today as the Sensex drops 800 points

Equity markets opened sharply lower on Tuesday, with both the BSE Sensex and NSE Nifty50 erasing previous session gains amid a mix of global headwinds, profit booking, and renewed Covid-19 concerns.

As of 10:45 am:

• The Sensex was down 838.64 points to 81,337.81

• The Nifty50 dropped 238.40 points to 24,762.75

Key Reasons for the Decline:

1. Global Uncertainty:
   Losses in Chinese and Hong Kong markets, driven by price war concerns in autos and fears of fresh US tariffs on Apple suppliers, weighed on sentiment.

2. Covid-19 Spike:
   A rise in global Covid-19 cases has stoked fears of economic disruptions again, shifting investors to a risk-off mode.

3. Profit Booking:
   After a strong market rally, high valuations prompted institutional and retail investors to lock in gains, leading to a sharp pullback.

4. Sectoral Weakness:
   Banking, IT, and financial services were the most affected sectors, amplifying the downward move.

Expert Views:

• Dr. V K Vijayakumar (Geojit Financial Services) believes the market may be entering a consolidation phase, marked by selling on rallies and buying on dips, supported by mutual fund cash reserves.

• He noted that a sustained uptrend is unlikely until there are clearer signs of corporate earnings growth, which he expects to emerge only after a few quarters.

• On the positive side, retail SIP flows remain strong, and accumulation in rate-sensitive sectors like auto suggests anticipation of future rate cuts as inflation trends lower.

• Devarsh Vakil (HDFC Securities) flagged global cues as key pressure points, particularly weakness in Chinese equities, automobile sector price wars, and tech sector vulnerability due to US-China trade tension.

Technical Outlook:

• The Nifty has broken out of its consolidation range between 24,500–25,000.

• Resistance: Seen at 25,207 (76.4% Fibonacci retracement from 26,277 to 21,743).

• Support: Immediate support lies near 24,800.

Conclusion:

The sell-off appears to be a mix of valuation concerns, global uncertainty, and sector-specific weakness, with technical and psychological levels being tested. While underlying domestic fundamentals like SIP inflows and monetary policy expectations provide support, near-term volatility may continue unless earnings clarity and global stability return.