NEW DELHI: After rising over 5 per cent in July 2017, BSE benchmark Sensex has plunged over 700 points, or 2 per cent, so far in August. The 30-share BSE Sensex tanked 216 points to breach below the 32,000 mark in Wednesday’s trade. The NSE Nifty index, which had slipped below the 10,000 mark on Tuesday, shed 70 points more.Going by the buzz on Dalal Street, here are the top five factors that dampened the rally in the domestic market.Escalating tension between US and North Korea is one of the reasons to worry about for global equity markets. North Korea said it is considering plans for a missile strike on the US Pacific territory of Guam, just hours after President Donald Trump told the North that any threat to the United States would be met with "fire and fury".Hitesh Agrawal, EVP & Head – Retail Research, Religare Securities said, “One should stay cautious on the further movement of domestic equity markets. Geopolitical unrest, progress of monsoon and earnings recovery will be the key drivers.”Sentiment also got hurt after the market regulator on Monday night directed bourses to initiate action against the suspected ‘shell’ companies. The regulator has imposed trade restrictions on 331 firms which are suspected of being "shell companies". Anand James, Chief Market Strategist, Geojit Financial Services said, “The abruptness of Sebi order on ‘shell’ companies has had a cascading effect on an indecisive market which had seen recent surge in VIX and restrained approach from FIIs in the equity segment.”Heavy profit booking in sectors like real estate , banking and capital goods further dampened the rally in markets. The BSE Realty index slipped 3.75 per cent to 2,104.33 till August 8 from 2,186.28 on July 31. BSE Bankex and Capital Goods also tumbled 2.11 per cent and 2.01 per cent, respectively, on a month-to-date basis. During Jan-July 2017, the BSE Realty index, Bankex and Capital Goods index had surged 66 per cent, 38 per cent and 30 per cent, respectively.Slow implementation of the Real Estate Regulation Act (RERA) seems to have taken a toll on realty stocks this month."RERA implementation has seen slow start with 11 states yet to notify final rules, only 7 states with functional website and 4 with permanent regulators. In the medium term, non-serious players may find difficult to adhere to RERA requirements and could exit business," Edelweiss Securities said in a report.Flows from foreign portfolio investors into India have slowed of late as rich valuations and delay in corporate earnings recovery have reduced their appetite for domestic stocks. After pouring over Rs 50,000 crore in equity markets during February-July, foreign portfolio investors have sold shares worth Rs 2,549 crore (net) in August so far, according to data available with depository NSDL."The main foreign worries over the Indian market are the relatively high valuation levels, the still mediocre corporate investment growth and, linked to this, the balance-sheet problems in the state-owned banks," said Maarten-Jan Bakkum, senior emerging markets strategist at NN Investment Partners which manages about $208 billion in assets to ET.At present, Sensex is trading at price-to-earnings ratio of 24.05 against average P/E of 19.23 and 19.33 in the past five years and 10 years, respectively.Gautam Chhaochharia, Head of India Research, UBS in a chat with ET Now said, “We believe that investors are overweight in India but because of the valuations despite the lack of growth recovery in India we do sense some foreigners have trimmed their overweight position and that is the reason why we have not seeing these kind of flows into India unlike what we are seeing globally.”