There were 4 reasons for the sharp fall in the Indian markets on Wednesday.

· The 3000 point rally in the Sensex was too frantic in the last 2 days and there had to be some profit covering in the markets. That is what you saw on Wednesday.

· The rally was largely driven by short covering and with most shorts covered in the market, the rally did not have further legs to go up.

· The proposal to impeach Trump has not gone down well with the markets. If Nancy Pelosi and team succeed in impeaching the President over the use of Ukrainian President to downplay Biden’s chances, then global markets could go into turmoil.

· Lastly, the BREXIT gets more confusing with the Supreme Court striking down the suspension of parliament. This will put the UK government in a spot and make their position almost untenable.

It is early to say if the rally is over but surely there are some signs of concern in the markets.