Sensex Drops 800 Points, Nifty Nears 24,500 – What’s Causing the Market Slump?

Market Meltdown: Sensex Plunges 800 Points, Nifty Tests 24,500 Level

Written by: Supriya Kadu

Edited by: Pinky Deshmukh

Last Updated: June 02, 2025

Summary: The Sensex collapsed by 800 points ,and the Nifty 50 was near 24,500 on Monday. Know the cause of this downfall here.

The Indian stock market commenced on a rough note, citing both the Sensex and Nifty opened in red today. The Nifty 50 was nearing a drop below 24,500, while the Sensex fell over 800 points. But what caused this sudden drop?

Let’s break it down.

U.S. Tariff Hikes:

Investor mood sank after US President Donald Trump stated that tariffs on steel and aluminium imports would rise to 50% on June 4. This decision heightened global trade tensions, especially for Indian metal exporters and related businesses.

Sectoral Weakness:

The IT and metal sectors led the decline, with indices like Nifty Metal and Nifty IT down 0.7% and 1.0%, respectively. HDFC Bank, Reliance Industries, and ICICI Bank all posted losses, contributing to the overall market fall.

Global Economic Uncertainty:

Investors are concerned about growing trade tensions between the United States and China, as well as forecasts for impending US job statistics. This global uncertainty has had a spillover effect on Indian markets.

Geopolitical Risks:

The ongoing war between Russia and Ukraine adds another layer of complexity, posing geopolitical risks that affect market sentiment.

Profit Booking:

With the recent gain, some investors are taking profits, resulting in a sell-off in specific equities and sectors.

Market Outlook:

Even with the current downfall, India's strong GDP growth in the March quarter, driven by manufacturing and construction, is a positive sign. However, in the medium term, market trends will be shaped by geopolitical events, sector performance, and global trade policies.