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Explained: Why Indian markets have crashed, and what is likely to happen next

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The benchmark Sensex at BSE fell sharply by 1,280 points or 2.2 per cent in the initial trading hours Monday, under pressure from lingering global inflation concerns, expectations of a faster pace of rate hikes by the US Federal Reserve, and concerns over weakness in the Chinese economy, alongside the rising Covid-19 cases.

While the Sensex fell by up to 2 per cent, other key Asian markets, too, fell sharply on Monday. The Nikkei in Japan fell up to 1.9 per cent, while Shanghai Composite in China fell by up to 1.3 per cent.

Why did Indian markets fall?

Indian markets that opened after a gap of four days fell sharply in line with growing concerns over various developments, including the continuing Russia-Ukraine war. There have also been concerns over the European Union embargo on Russian gas, and some sanctions on Russian crude in the next set of EU sanctions.

As inflation continues to remain a big concern, there are expectations in the market that…

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