Monday Mayhem: Three reasons why Sensex & Nifty tumble down

The beginning of the week was disappointing for investors as Sensex cutting its six-day winning streak ended in negative territory on Monday. India VIX rose by 25 per cent.

Sensex had touched a crucial mark of 40,000. The index not only erased its early morning gains but also, dived down by more than 800 points closing at 38,628.29 levels. On the other hand, Nifty closed down by more than 2 per cent.

​India-China tensions

Following fresh tensions along India-China border, a huge sell-off in the markets was triggered. According to the Indian Army, Chinese troops on the night of August 29 and 30, violated the previous consensus and carried out provocative military movements to change the status quo. Indian troops pre-empted the activity of People’s Liberation Army (PLA) on the southern bank of Pangong Tso Lake and undertook measures to strengthen its positions.

India GDP numbers

Besides, investors have been keenly eyeing the first-quarter GDP numbers, which will be released by Central Statistical Organisation (CSO) later today. Due to the Coronavirus-led lockdowns and disruptive situations, a massive contraction in GDP is expected.

Profit booking

Additionally, investors opted to book profits after witnessing a positive and decent rally in the domestic markets post a sharp fall in March 2020. From the month of May 2020, Indian markets saw a comparatively stable growth as against the immense volatility in March and April 2020. As new margin rules are set to kick-in from September 1, brokers may have pushed investors to book profits today.