Sensex ends below 39K; here are 5 factors behind the meltdown

Sensex plunged 491 points ending 1.25 percent lower on June 17 on mixed global and domestic cues. Nifty broke below the crucial support of 20-day EMA, as well as 11,800 level.

Among sectors, the S&P BSE Metal index ended more than 3 percent lower, followed by the S&P BSE Energy index, BSE Oil & Gas index, BSE Bankex, and BSE Realty index.

Trade war concerns, rise in crude oil prices, selling in metal and banking stocks, the slowdown in FII money, etc. are some of the factors weighing on markets.

Here are the top 5 factors that could be weighing on markets:

Trade war fears: India imposes retaliatory tariffs

Trade war fears escalated sharply after India slapped higher tariffs on certain US products in retaliation to Washington’s decision to remove certain trade privileges for New Delhi.

The move will hurt American exporters of the listed 28 items as the importers will have to pay duties on these products, hence they might reduce the import. India would get about $217 million additional revenue from such imports, said a Reuters report.

Higher Indian tariffs on US goods could impact growing political and security ties between the two nations, it said.

Upcoming FOMC meeting:

Investors across the globe are trading with caution ahead of the crucial FOMC meeting this week. The two-day policy meet will start from June 18-19.

US markets extended gains as market participants are pricing in that US Fed may become dovish in June policy meeting. However, any outcome which suggests that US Central Bank has turned hawkish would dent sentiment.

Slowdown in FII investment:

After pouring in more than Rs 3,000 crore on June 3 when Nifty hit a record high, the momentum has slowed. FIIs have turned net sellers again in June in the cash market.