Why is the Stock Market Down Today? Sensex Falls 600 Points, Nifty Below 24,800
On Tuesday, August 26, 2025, the Indian stock market
faced a major decline. The Sensex dropped by more than 600 points, and
the Nifty index fell below the 24,800 mark. Investors became worried and
started selling stocks. There are seven big reasons why this happened.
Let us understand them one by one in simple words.
1. U.S. Tariffs Begin
The biggest reason is new tariffs from the United States.
A new rule came into effect at midnight. The U.S. government has decided to put
high tariffs (taxes) on goods imported from India. These tariffs could
be as high as 50% on some products.
This means many Indian companies that sell goods to the U.S.
will have to pay more taxes. Their products will become more expensive in the
U.S. market, and they might lose customers. Sectors like textiles,
chemicals, and seafood will be affected the most.
Because of this news, investors became scared and sold
shares of companies that export goods to the U.S. This selling brought the
stock market down.
2. Profit Booking
Last week, the stock market had gone up a lot. Many
investors had bought shares earlier at lower prices. Now they decided to book
profits, which means selling shares to make money from the price rise.
When many investors sell at the same time, prices go down.
This profit booking after a strong rally added extra pressure on the market
today.
3. Foreign Investors Selling
Foreign Institutional Investors (FIIs), who invest
large amounts of money in Indian markets, started selling heavily. FIIs often
react quickly to global events like tariffs, currency changes, and interest
rate expectations.
When FIIs sell shares in bulk, it puts big pressure on the
market because they hold large positions. Today, their selling was one of the
main reasons the Sensex and Nifty fell so much.
4. Weak Rupee
The Indian rupee has become weaker compared to the
U.S. dollar. When the rupee falls, importing goods like crude oil becomes more
expensive. India buys most of its oil from other countries.
Higher oil prices can increase transportation costs and
inflation. This means goods become expensive for people, and company profits go
down. So, investors worry when the rupee becomes weak.
5. Global Market Weakness
It is not just India; global markets are also weak today.
Stocks in the U.S., Europe, and Asia are falling because of worries about trade
tensions and economic slowdown.
When global markets fall, Indian markets also feel the
effect because everything is connected. Foreign investors take money out of
risky markets like India when they see problems in the global economy.
6. Rising Crude Oil Prices
Crude oil prices have gone up in the last two weeks. Today,
they touched the highest level in two weeks. When oil prices rise, it
creates inflation pressure in India because fuel becomes costly.
If inflation rises, the Reserve Bank of India (RBI) might
not cut interest rates. Higher interest rates make borrowing costly for
businesses and people. This is another reason why investors are worried.
7. Technical Reasons
Stock markets also work on technical indicators.
These are signals traders use to decide when to buy or sell. Last week, the
market looked “overbought,” meaning prices had gone up too much too fast.
When this happens, many traders expect a fall and start
selling. Even computers that trade automatically (algorithmic trading) start
selling when these signals appear. This adds to the fall in stock prices.
Other Important Points
- Midcap
and Smallcap Stocks Also Fell: Not only big companies, but even
smaller companies saw their share prices go down.
- Sectors
Under Pressure: Almost all sectors were in red (down). Technology,
auto, and export-oriented sectors were hit the most because of U.S.
tariffs.
Some consumer companies managed to stay stable, but overall,
the market mood was very negative today.
What Does This Mean for Investors?
Today’s fall was big, but such corrections are normal in
stock markets. Experts say this is a reaction to global worries and trade
tensions. If the U.S. tariffs continue for a long time, Indian exporters will
face problems.
Long-term investors should not panic. Instead, they should
wait and watch. Markets may remain volatile (up and down) for a few days. If
you are investing for the long term, experts suggest buying quality stocks
slowly during dips.
What Will Happen Next?
The market will keep an eye on:
- Any
new announcements from the U.S. government about tariffs
- The rupee’s
movement against the dollar
- Crude
oil prices
- Foreign
investor behavior
If global conditions improve and tariffs reduce, the market
may recover. But if things get worse, there could be more selling in the short
term.
Source- The Economic Times
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