Sensex crashes over 800 points, smallcaps worst hit. 5 factors brought the bears out

economictimes.indiatimes.com:

Sensex fell over 800 points on Wednesday, while Nifty gave up the support at 24,200 to fall more than 1%. Retail investors, who got used to seeing their portfolio going up almost every day, were in for a rude shock as smallcap and midcap indices recorded their worst day in more than a month.

The sudden U-turn in the market came after both Sensex and Nifty scaled fresh all-time peaks in the opening session only to gradually succumb to bear pressure.

The sell-off in Nifty was led by a 7% decline in Mahindra & Mahindra (M&M) where investors see price cuts in XUV700 as a sign of weakening demand in the car industry. Other top blue-chip losers include HCL Tech, Tata Steel, Tata Motors, and RIL.

All sectors were trading in the red with auto, media, PSU banks, real estate, and oil and gas being the worst hit.

Here are the key factors behind today's fall in Sensex & Nifty:

1) Profit-booking

Following a 12% return year-to-date in Nifty and even higher gains in small and midcap stocks, investors have been looking for opportunities to take some profits off the table. Analysts point out that bulls have been showing signs of fatigue even as all dips eventually get bought into.

After hitting new record highs every other day, bulls are looking for fresh triggers to take the market higher.

2) Valuations

Whether you agree with the theory that Sensex is overvalued at 80,000 or not, many individual stocks have been trading at elevated valuations as retail, domestic mutual funds, and FIIs have been on a buying spree in the