Why did market crash today? Nifty hits fresh 52-week low, Sensex tanks over 1,000 pts. 7 triggers behind Rs 10 lakh cr bloodbath

The Indian stock market crashed on Thursday, with Nifty hitting the lowest level since April 2025 as RBI policy tightening, persistent FII selling and other factors spooked investors.

The Nifty 50 sank to a fresh 52-week low of 22,179, before recovering some losses to close at 22,232. Sensex meanwhile plunged more than 1,045 points to close at 71,593. The sharp sell-off wiped out more than Rs 10 lakh crore from the total market capitalisation of companies listed on the BSE, taking it to Rs 460 lakh crore.

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ITC shares plunged more than 4% to lead losses on Sensex, while IndiGo, Power Grid, BEL and Adani Ports shares dropped around 3% each. NTPC, Reliance Industries, Maruti Suzuki, Tata Steel, UltraTech Cement, L&T, Bharti Airtel, Asian Paints, Bajaj Finserv, Sun Pharma and HDFC Bank shares meanwhile fell around 2% each.

Broader markets plunged further, with Nifty Midcap 100 and Nifty Smallcap 100 indices crashing up to 3%. Among the sectors, Nifty Metal and Nifty Realty sank more than 3% each to lead losses. The overall market breadth strongly favoured the bears, as NSE saw 2,950 declines against 660 advances, while 112 stocks remained unchanged.

Stock Market Down Reasons

Here are the key factors spooking investors today:

1) Investors assess RBI’s calibrated tightening stance

RBI announced its first rate hike in nearly four years, but market analysts noted that the central bank’s decision to change its stance from ‘neutral’ to ‘calibrated tightening’ amid challenging global geopolitical background was the more important takeaway. Jefferies expects RBI to hike interest rates by around 100 basis points in the ongoing cycle.

Nomura also highlighted that change of stance came as a surprise. “We believe this was aimed at anchoring inflation expectations and building a buffer against adverse global conditions. However, the message was mixed, with the MPC clarifying that “calibrated tightening” only signalled “no rate cuts”, and indicated data dependence going forward,” it added.

2) Bond yields soar to 24-year high

The global bond selloff deepened, pushing bond yields to multi-year highs. The US 30-year bond yield soared above 5.71%. The yield on the benchmark 10-year notes jumped above 5.3%, while those of the two-year notes neared 4.9%.

Soaring bond yields typically make debt markets more attractive to investors, which in turn puts pressure on the emerging equity markets. Bond yields move inversely to bond prices, so soaring yields reflect a sharp selloff in bonds.

3) Oil jumps above $102/barrel amid rising attacks on ships in Middle East

Adding fuel to the fire, Brent crude oil prices jumped another 2% to cross $102 per barrel as investors remained concerned about supply from the Middle East amid rising attacks on shipments in the Gulf and the critical Strait of Hormuz.

Last week, attacks on tankers moving through the Strait of Hormuz hit their highest in any week since the Iran war began earlier this year while Gulf producers increased exports. The increase in attacks came as more crude is flowing out of the Gulf but at higher costs and risk to cargoes and crew. A tanker in the north of Qatar was struck by multiple projectiles, causing casualties, the United Kingdom Maritime Trade Operations agency said on Wednesday.

Crude inventories meanwhile dropped by 3.2 million barrels to 424.1 million barrels last week, the Energy Information Administration said on Wednesday, compared with analysts' expectations in a Reuters poll for a 1.7 million-barrel decline.

4) Massive FII selling streak

Foreign investors meanwhile continued to sell Indian equities, net selling shares worth more than Rs 6,121 crore on Wednesday, according to provisional data on NSE. FIIs have net sold Indian equities worth nearly Rs 57,000 crore in nine consecutive sessions till Wednesday.

Overall, FIIs have remained net sellers of Indian equities in 20 out of 25 session since the beginning of September. Persistent FII selling despite brief bouts of purchases have been weighing on Dalal Street since the war in the Middle East began earlier this year.

Also Read | Rs 13,000 crore blow in September! Why Indian financial stocks are fastest to sell for FIIs this year

5) Fed rate hike worries

Fed policymakers were divided last month over the rationale behind raising interest rates, with some participants seeing a hike as necessary to keep the impact of energy and other price shocks at bay, but a more hawkish core viewing it as necessary to guard against emerging demand-driven inflation, minutes showed.

While traders see only an 18% chance of a rate hike later this month, they are pricing in an 80% chance of an increase in December, according to CME's FedWatch tool, as cited by Reuters.

6) Weak global cues

Dalal Street is accompanying its global peers in the sharp selloff today. South Korea’s Kospi plunged more than 2%, while Japan’s Nikkei, China’s Shanghai Composite and Hong Kong’s Hang Seng dropped more than 1% each.

Wall Street and European markets also closed in the deep red yesterday, while Dow Jones futures currently indicate an extension of losses for the American stock market later today.

7) Selloff intensifies as key technical levels breached

The fall in the stock market intensified in the mid-trading hours as Nifty breached key support levels, accelerating the selloff. Hemang Gor, Senior Research Analyst of Derivatives and Technical Research at Axis Direct had warned that the market's undertone remains deeply fragile while Nifty hovers below the 22,800 pivot. He saw the benchmark index’s immediate support at 22,500, and a break below that level exposes chances of the index falling to 22,300 and the 52-week low near 22,180.

What can bring the bulls back to Dalal Street?

The calibrated tightening stance of the RBI has implications for markets, VK Vijayakumar, Chief Investment Strategist at Geojit Investments, highlighted. With two more rate hikes of 25 bps each likely in this rate hiking cycle, there will be pressure on valuations rising from higher fixed income returns, he said, adding that investor preferences also might shift marginally towards interest inelastic segments like pharmaceuticals.

Also Read |RBI hikes rate, but analysts see shift to ‘calibrated tightening’ as bigger takeaway. How can this impact markets?

“A distinct and strong trend in the market in recent months has been the increasing preference for growth stocks over value stocks. Growth stocks are being accumulated at high valuations while value stocks are languishing at fair valuations. Sustained selling in large-caps by the FIIs have contributed significantly to this trend. With the US 10-year bond yield hovering above 5.3%, FIIs will continue to sell on every rally. This will put the Nifty large-caps under pressure for some more time,” he added.

A reversal in this trend will happen only when FIIs turn buyers, and there is no clarity on when this will happen, the analyst noted. “In brief, this frustrating period in the market might continue for some more time. Remaining invested in value stocks will be rewarded in the long run. Investors should also look at the good opportunities in fixed income in this rising rate environment,” he further said.

Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.