Stock market crash today: Indian stock market benchmarks suffered significant losses on Friday, August 22, due to profit booking across segments amid mixed global cues. This reflected caution among market participants ahead of US Fed Chair Jerome Powell’s speech at theJackson Hole symposium.
The Sensex crashed over 700 points, or nearly 1 per cent, to hit an intraday low of 81,291.77, while the Nifty 50 also dropped by almost a per cent to fall to the day’s low of 24,859.15.
Eventually, the 30-share pack closed 694 points, or 0.85 per cent, lower at 81,306.85, while the Nifty 50 settled with a loss of 214 points, or 0.85 per cent, at 24,870.10.
The mid- and small-cap segments outperformed. The BSE Midcap and Smallcap indices closed 0.23 per cent and 0.35 per cent, lower, respectively.
Why did the Indian stock market fall today?
Experts highlight the following five factors behind the fall in the domestic market:
1. Profit booking after a 1,800-point rally in Sensex
Experts believe one major reason behind today’s decline in the domestic market is profit booking after six consecutive sessions of strong buying.
The Sensex gained about 1,800 points and had been in the green for six consecutive sessions from August 13 to August 21, its longest daily winning streak since late April this year.
Even though the market’s long-term outlook remains positive, investors are booking some profits due to tariff-related uncertainty and weak earnings.
“Over the past two months, Thursdays, Fridays, and Mondays have seen heightened activity in the Indian stock market, driven by factors ranging from Trump’s tariff concerns to geopolitical tensions. Currently, the market is witnessing profit booking ahead of next week’s tariff deadline,” said Prashanth Tapse, Senior VP (Research), Mehta Equities.
2. Focus shifts to Trump’s tariffs
The market is also worried about the looming risk of US President Donald Trump’s tariffs. The secondary 25 per cent tariffs will come into effect from August 27, taking the total tariffs on Indian goods to 50 per cent.
The Indian Government said almost $50 billion worth of Indian goods will be affected once the 50 per cent US tariff comes into effect.
So far, the Trump administration has not provided any positive signs regarding the removal of the secondary tariffs or extending the deadline.
“The headwinds for the market from Trump tariffs will weigh on markets, constraining the rally of the last six days. If the penal tariff of 25 per cent kicks in on August 27, and this appears likely, the impact on India’s growth will not be 20 to 30 bp estimated with 25 per cent reciprocal tariffs, but more. The market will have to discount that,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
3. Caution ahead of Powell’s speech at Jackson Hole
Cautious global sentiment spilt into the domestic market ahead of US Federal Reserve Chair Jerome Powell’s speech at Jackson Hole on Friday (August 22). He will speak at 10 AM EDT (7:30 PM Indian Standard Time).
Powell’s term ends in May next year, so this will be his last speech as Fed Chair. Experts expect some hints about the US Fed’s monetary policy trajectory. The focus will also be on the Fed’s assessment of the US economy’s growth-inflation dynamics.
4. Heavyweight sectors not performing
Weak Q1 earnings of India Inc. seem to have eroded investors’ confidence in sectors such as banking and IT, which are witnessing profit booking. Some experts see this as a major factor behind the “sell-on-rise” trend in the market.
“Earnings have largely been weak. Without earnings revival, a sustainable move is a difficult scenario. In the short term, there could be a liquidity-driven rally or short-covering every now and then,” said Ajit Mishra, SVP of research at Religare Broking.
“Pressure on banking stocks remains a major concern. This trend has persisted since news emerged about a possible rebalancing of stocks with high index weightage. Apart from banking, sectors that were previously performing well have also started witnessing profit booking, while the IT sector is not participating at all,” Mishra said.
5. Escalating tensions between Russia and Ukraine
Escalating tensions between Russia and Ukraine have dealt a strong blow to optimism that the war was nearing its end. For India, this is a dual negative—both economically and geopolitically.
Crude oil prices rose by over a per cent amid reports of fresh tensions between the two countries, which is negative for India, one of the world’s largest crude oil importers.
Meanwhile, Trump had earlier hinted that secondary tariffs on India may not be imposed if the Russia-Ukraine war ends. The US administration believes that New Delhi can play a significant role in ending the European conflict.
White House Trade Adviser Peter Navarro reportedly highlighted India’s key role in ending the Ukraine-Russia conflict. “In many ways, the road to peace runs through New Delhi,” Navarro said.
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