Why did Sensex crash 1,200 points and Nifty fall 400 points today?

Sensex dipped nearly 1,300 points to a day’s low of 76,030.59 while Nifty tumbled nearly 400 points to hit an intraday low of 22,986.65.

Also read: Sensex crashes 1,000 points over US tariffs fear, Nifty down 330 points

All sectoral indices on Nifty were in the red, with Nifty Midsmall Financial Services crashing a massive 4% and Nifty Realty falling 3.80% intraday.

Why did markets dip?

Tariff threats: US President Donald Trump’s tariff threats may have played a major role in the stock markets crashing in India on Tuesday. As he announced a 25% tariff on aluminium and steel imports into the US apart from additional potential tariffs, market sentiment globally took a hit. This may have further prompted traders to withdraw funds, thereby bringing markets down.

Also read: Trump to impose new 25% tariff on US steel, aluminum imports

US Fed chief Powell’s testimony: Traders globally are also awaiting US Federal Reserve chief Jerome Powell’s testimony before the Senate Committee on Banking, Housing and Urban Affairs and the House Financial Services Committee. Powell will deliver an assessment of the US economy and then face questions from US lawmakers.

FII/FPI effect: Foreign Institutional Investors and Foreign Portfolio Investors (FIIs and FPIs) have also withdrawn massive amounts of funds from the Indian market. The two investor groups net withdrew a combined total of ₹2,463.72 crore, as per data available on NSE website. On the other hand, Domestic Institutional Investors (DIIs) only invested a net total of ₹1,515.52 crore.

Also read: Why did Sensex and Nifty close in the red for the 4th consecutive session today? 5 points

High bond yield & dollar index: US 10-year Treasury yield stands at 4.495% while the two-year yield is at 4,281%. Higher bond yields make US assets more attractive for international investors. A stronger dollar (based on the dollar index) and a weakening rupee have led to capital outflows from emerging markets like India.