Why is stock market down today? Rs 5 lakh crore wiped out! BSE Sensex crashes over 1,500 points – top reasons for fall
Stock market crash today: Nifty50 and BSE Sensex plunged in trade on Monday with oil prices continuing to remain high amid the ongoing US-Iran war. While Nifty50 went below 23,000, BSE Sensex dropped over 1,300 points. At 10:09 AM, Nifty50 was trading at 22,610.10, down 504 points or 2.18%. BSE Sensex was at 72,967.60, down 1,565 points or 2.10%.Investor sentiment continues to weaken amid escalating tensions between Iran and the US, a falling rupee, and other global concerns. The broad-based selloff eroded close to Rs 5 lakh crore in market capitalisation of BSE-listed companies, bringing the total valuation down to Rs 424 lakh crore, according to an ET report.Selling pressure was widespread across the market, with all 30 Sensex constituents trading in negative territory. Stocks such as Tata Steel, State Bank of India (SBI), HDFC Bank, Bajaj Finance, Titan and Mahindra & Mahindra (M&M) declined between 2 and 3 per cent, leading the losses on the benchmark index.On the National Stock Exchange, sectoral indices were uniformly in the red. The Nifty Metal and Nifty PSU Bank indices emerged as the worst performers, each falling more than 3 per cent in early trade. Market breadth remained weak, with around 2,328 stocks declining, compared to 249 advancing and 74 remaining unchanged.Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited says, “With the war in West Asia getting into the fourth week, there is no clarity on when the war will end. Unfortunately, the war is escalating with President Trump giving an ultimatum to Iran to open the Strait of Hormuz in 48 hours. The Iranian president’s response that “ the Strait of Hormuz is open to all except those who violate our soil” has prevented panic in the oil market. However, the uncertainty is huge and markets will be waiting and watching the outcome.“It is important to understand that the huge risk-off globally has impacted all assets including stocks, bonds and precious metals like gold and silver. In fact, the crash in safe haven gold is worse than in equities. There is nothing that investors can do during this crisis characterised by huge uncertainty. If history is any guide, investors should not panic, but keep cool. The sharp depreciation in the rupee will benefit exporters like pharmaceuticals and autos and auto ancillaries. The beaten down IT segment may surprise with a bounce back.”Equity markets across the world witnessed sharp declines, mirroring the downturn seen in Indian markets. Asian indices fell steeply on Monday, with South Korea’s Kospi dropping over 6 per cent, Japan’s Nikkei declining more than 4 per cent, and Hong Kong’s Hang Seng losing 3.5 per cent.
Why is stock market down today? Top reasons
US-Iran war:The ongoing conflict involving Iran, the US and Israel intensified over the weekend, heightening concerns about further escalation in the oil-rich Middle East. Despite earlier hopes of a diplomatic breakthrough, tensions have continued to rise as the conflict entered its fourth week. US President Donald Trump said that he has set a Monday deadline for Iran, warning that the US can strike Iran’s power plants unless Tehran fully reopens the Strait of Hormuz within 48 hours. In response, Iran warned it would target energy and water infrastructure across the Gulf if the US follows through on its threat.High crude oil pricesAt the same time, crude oil prices remained elevated amid the worsening geopolitical situation. Brent crude climbed to $113 per barrel on Monday morning, extending gains seen since the conflict began. The effective disruption of the Strait of Hormuz, a key route that handles over 20 per cent of global oil supply and connects the Persian Gulf with the Gulf of Oman and the Arabian Sea, has been a major factor behind the surge in prices.After briefly allowing vessels to pass, Iran has again threatened to shut the Strait of Hormuz indefinitely if the United States proceeds with potential strikes on its energy infrastructure, further fuelling the rally in oil prices.Rupee hits a new record lowThe Indian rupee continued its downward trajectory against the US dollar, opening at an all-time low on Monday amid rising crude prices, sustained foreign fund outflows and other pressures. The currency weakened to 93.84 per dollar, breaching its previous record low of 93.7350 recorded on Friday.Highly sensitive to movements in oil prices, the rupee has depreciated by nearly 3 per cent since the onset of the Middle East conflict.Continued FII outflowsForeign institutional investors have remained consistent sellers of Indian equities since the escalation of tensions in the oil-rich Middle East, reflecting a broader risk-off sentiment in global markets. On Friday, FIIs extended their selling streak to a 16th consecutive session, offloading shares worth Rs 5,518 crore, according to NSE data.Although this does not capture Monday’s activity, the sustained outflows in recent sessions have continued to dampen overall market sentiment.Rise in US bond yieldsUS Treasury yields moved higher, with the 10-year yield rising by more than 10 basis points to cross the 4.4 per cent mark on Friday, its highest level in nearly a year. The two-year yield, which is particularly sensitive to expectations around Federal Reserve policy, also climbed to 3.93 per cent.Higher bond yields generally enhance the appeal of fixed-income instruments relative to equities, thereby exerting pressure on stock markets.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)
