Sensex and Nifty News: Indian Stock Market Tanks as Investors Lose ₹6 Lakh Crore

Market Performance

The Indian stock market witnessed a sharp downturn on Tuesday, May 20, amid a combination of weak global cues, trade uncertainty, and FII outflows.

• Sensex fell 873 points or 1.06%, closing at 81,186.44
• Nifty 50 dropped 262 points or 1.05%, ending the session at 24,683.90

Both indices saw their third consecutive session of decline. The Sensex hit an intraday low of 81,153.70, while the Nifty 50 fell to 24,669.70.

Mid- and small-cap indices also faced the brunt:

• BSE Midcap: Down 1.65%
• BSE Smallcap: Down 0.96%

The overall market erosion led to a staggering ₹6 lakh crore loss in investor wealth as the BSE market cap fell from ₹444 lakh crore to ₹438 lakh crore.

Main News: 8 Key Reasons Behind the Market Crash

1. Weak Global Cues

Asian markets followed Wall Street's weak momentum.

• South Korea's Kospi slipped.
• US Futures were flat, impacted by hawkish Fed commentary.

Atlanta Fed President Raphael Bostic indicated just one rate cut in 2025, which rattled investors globally.

2. Foreign Institutional Investors (FII) Outflows

FIIs sold ₹525.95 crore worth of Indian equities on May 19, reacting to high valuations and global uncertainties.

3. India-US Trade Deal Uncertainty

The absence of a concrete trade agreement after Commerce Minister Piyush Goyal's US visit raised concerns.

Investors are awaiting an announcement before US tariffs kick in later this month.

4. Elevated Valuations

• Nifty PE Ratio: Currently at 22.3, it's the highest in six months
• Slightly above its 2-year average PE of 22.2

This suggests limited upside, prompting caution among institutional investors.

5. Downgrade of US Credit Rating

Ratings agency Moody's downgraded the US's sovereign credit outlook due to rising debt and political gridlock.

This introduced fresh uncertainty in global financial markets.

6. Rising Global Trade Tensions

US Treasury's warnings about possible tariff hikes on key partners heightened fears of a slowdown.

Investors fear this could spark volatility across global markets.

7. Weakening Indian Rupee

• The rupee fell by 13 paise to ₹85.55 against the US dollar.
• Foreign outflows and strong US bond yields triggered this decline.

8. COVID-19 Cases on the Rise Again

A gradual uptick in COVID-19 cases has also added to investor caution.

• India reported 164 new cases since May 12.
• 257 active cases were recorded, with Kerala, Maharashtra, and Tamil Nadu key contributors.

Company Details

The sharp correction was seen across all major sectors:

• Top Losers: Eicher Motors, Hero MotoCorp, Maruti Suzuki, Cipla, Shriram Finance
• All 13 sectoral indices closed in negative territory.

Auto and financial stocks led the decline, dragging the broader market.

Summary of the Article

In today's Sensex and Nifty news, Indian equity markets endured a severe fall, wiping out over ₹6 lakh crore in investor wealth. A combination of weak global cues, foreign investor selling, trade uncertainties, and elevated valuations triggered the sell-off.

With no fresh positive triggers in sight and the pending India-US trade deal, market sentiment is likely to remain careful in the near term. All eyes are now on upcoming RBI and US Fed policy meetings, which may provide the next direction cue for the markets.