Why did Sensex, Nifty crash today? 5 reasons why share market is down

Domestic stock markets nosedived on Monday, with benchmark indices witnessing sharp losses. The S&P BSE Sensex plummeted as much as 1,200 points, while the NSE Nifty50 fell well over 2% to hit an intraday low of 23,601.50.

You are watching: Why did Sensex, Nifty crash today? 5 reasons why share market is down

At around 2:49 pm, the Sensex was down 1373.20 points to 77,871.20 and the Nifty50 tumbled 420.10 points to trade at 23,551.90.

The downturn was driven by a combination of domestic and global factors, triggering a broad sell-off across sectors.

Volatility spiked as the Nifty50’s volatility index rose to 14.5, indicating heightened nervousness among investors. Broader market indices, including Nifty Smallcap100 and Midcap100, faced steep declines of 2.60% and 2.40%, respectively.

The sell-off was particularly severe in PSU banking, metals, and realty sectors, with no sector managing to stay in the green.

See more : Stock Futures Inch Higher; Nvidia Continues Rising After CEO’s Keynote Speech

Experts have identified multiple reasons behind the market crash, ranging from the detection of Human Metapneumovirus (HMPV) cases in India to weak global cues and ongoing FPI outflows.

Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted, “The market is likely to be influenced by the negative factors impacting FII flows and some positive domestic factors which can support the market.”

WEAK GLOBAL CUES

Global economic conditions remain unfavourable, with a high dollar index at 109 and the 10-year US bond yield at 4.62%. Dr. Vijayakumar explained, “The FIIs are likely to continue selling till the yields decline and the dollar stabilises.” These global challenges are weighing heavily on Indian markets.

SECTORAL SELL-OFF

Sectoral indices on the Nifty were deep in the red, with Nifty PSU Bank falling 3.63%. Nifty Metal and Realty also saw sharp declines, dropping 2.98% and 2.77%, respectively. Broader indices, including Nifty Smallcap100, took a heavy hit as selling pressure mounted across the board.

WEAK Q3 BUSINESS UPDATES

Concerns over weak business updates from key sectors, particularly banking and FMCG, have further dampened sentiment. Chowdhury noted, “Markets have been under pressure primarily due to weak business updates by companies, especially banks and some FMCG stocks.”

FPI SELLING AND RISING DOLLAR
Persistent FPI selling and a strengthening dollar have exacerbated the market downturn. Manish Jain, Director at Mirae Asset Capital Markets, highlighted the challenges: “The government’s capex spending remains elusive, while depreciation of the Rupee has intensified, and a revival in consumption is still not evident. The market is waiting for strong positive triggers which are still missing.”

VIRUS SCARE

Last but not least, the discovery of two HMPV cases in Bengaluru sparked panic among investors. Although the virus is not expected to have the same impact as Covid-19, it led to a knee-jerk reaction in the markets.

Manish Chowdhury, Head of Research at StoxBox, remarked, “Market sentiment may have turned a little sour due to initial HMPV cases found in India, but its impact may be limited as the fatality seems to be lower compared to the Covid virus.”

See more : Stock markets likely to close during day of mourning for Jimmy Carter

With corporate earnings, the upcoming budget, and global trade policies on the horizon, market volatility is likely to remain elevated in the near term.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)