Why is the Stock Market Falling Today? Three Reasons as Sensex Drops 600 Points

India's benchmark equity indices continued their downward trajectory on Tuesday, with the Sensex plunging over 600 points and the Nifty slipping deeper into negative territory by late morning trade. At around 11:48 am, the Sensex stood at 82,937.81, down 638.43 points, while the Nifty traded at 25,494.30, lower by 189 points. Broad-based selling across sectors reflected a sharp erosion of investor risk appetite, driven by a combination of domestic and international factors.

Geopolitical uncertainties and global tensions have significantly contributed to the market weakness. According to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, conflicting signals regarding a potential US-India trade deal, developments in Venezuela, escalating tensions involving Iran, and former US President Donald Trump’s statements on Greenland have intensified caution among investors. The elevated India VIX indicates heightened volatility expectations, while the pending Supreme Court decision on Trump-era tariffs adds further uncertainty ahead of key quarterly earnings.

Technical indicators have turned decisively bearish, reinforcing the downward momentum. The Nifty broke below the previous session’s low, forming a lower low and drifting towards critical support levels near 25,444 and 25,140. The index is now testing the 100-day exponential moving average zone around 25,600–25,550, which serves as immediate support. Momentum indicators, including RSI approaching oversold levels and a negative MACD, suggest sustained selling pressure, with the Bank Nifty also underperforming and trading below key moving averages.

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Investor sentiment has shifted firmly towards risk-off positioning as market participants adopt a cautious stance ahead of the Q3 earnings season. Ponmudi R, CEO of Enrich Money, noted that mixed global cues, sustained foreign institutional investor outflows, and concerns over geopolitical flashpoints, including civilian unrest in Iran, have prompted defensive portfolio adjustments. Heavyweight stocks have underperformed, further dampening overall market confidence.

The interplay of geopolitical risks, technical breakdowns, and anticipation of corporate earnings results has created an environment of elevated near-term volatility. Without positive developments in trade policy, geopolitical stability, or encouraging quarterly results from major companies, meaningful recovery appears limited. Analysts expect the cautious mood to persist until clearer signals emerge on these critical fronts.

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