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Indian Stock Market Falls Over 1%: 5 Reasons Behind Tuesday’s Sudden Slump

After Monday’s euphoric rally, the Sensex and Nifty 50 saw steep declines due to global trade concerns, profit booking, and geopolitical anxiety.

Market Snapshot – May 13, 2025:

Sensex closed: 81,148.22 (down 1,282 points or 1.55%)
Nifty 50 settled: 24,578.35 (down 346 points or 1.39%)
BSE Midcap index: +0.17%
BSE Smallcap index: +0.99%
Investor Wealth Loss: ~₹1.5 lakh crore

🔍 5 Key Reasons Behind the Market Crash

1. Trade War Fears Resurface

India has reportedly approached the WTO over retaliatory duties in response to US tariffs on steel and aluminium. This reignited trade war concerns, despite recent tariff de-escalations between the US and China.

Also Read: Gold Rate Reclaims ₹94,000 on MCX: Should You Buy Amid Global Trade Optimism?

2. Profit Booking After Monday’s Surge

Markets had rallied nearly 4% on Monday after the India-Pakistan ceasefire and positive global cues. But that surge, driven primarily by short-covering and retail participation, triggered widespread profit booking today.

“Institutional participation was modest on Monday. The rally was unsustainable,” said VK Vijayakumar of Geojit.

Also Read: Apple May Raise iPhone 17 Prices, Here’s Why

3. ‘Sell India, Buy China’ Sentiment

The US-China trade deal, though seemingly positive globally, may have created a rotation risk. Global investors could divert funds back to China, reviving a familiar trend that weakens India’s short-term investment attractiveness.

Also Read: Trump Revives ‘Most Favoured Nation’ Drug Pricing Policy To Slash Costs By Up To 80%

4. Lingering India-Pakistan Tensions

Despite a formal ceasefire, the geopolitical overhang remains. PM Modi’s strong message post-Operation Sindoor and recent drone activity near the border reignited security concerns among investors.

10–12 drones were intercepted near Samba; night blackouts continue in Jammu.

5. Lack of Fresh Catalysts

With the Q1FY26 earnings optimism priced in, and no new domestic triggers, the market lacked momentum. Many retail investors are now shifting to mid- and small-cap stocks, chasing returns but potentially ignoring valuation risks.

📌 Tags:
Sensex fall, Nifty crash, stock market news, India US tariffs, India Pakistan tensions, profit booking, US China trade deal, Indian economy, retail investors, FII, DII

Business Desk