Rs 6 lakh crore wiped off! Sensex slumps over 1,300 points, Nifty below 23,900: 5 factors behind today's market crash

Indian stock markets sharply declined on Wednesday, with Sensex dropping over 1,300 points and Nifty 50 falling below the 23,900 mark. The decline came after the benchmark indices opened flat amid mixed global cues and persistent pressure from the ongoing Iran–US-Israel.

The Sensex fell about 1,342 points to 76,864, closing below the key 77,000-mark. Nifty 50 dropped over 395 points to end the session at 23,867. The sharp decline wiped out nearly Rs 6 lakh crore from the total market capitalisation of BSE-listed companies, pulling it down to Rs 441 lakh crore.

Bajaj Finance, Axis Bank, Bajaj Finserv, Mahindra & Mahindra (M&M),Kotak Mahindra Bank and Maruti Suzuki shares were the top losers on Sensex, falling 3-5% each. Sun Pharma and NTPC were the only gainers.


Here are the key factors pushing markets down today:

1) Iran-Israel war rages on

Despite earlier expectations of a quicker resolution to the war in the Middle East, geopolitical tensions continue to rattle the oil-rich region. The US and Israel launched what some described as the war’s heaviest strikes on Iran, even after US President Donald Trump said on Monday that the conflict could be "over soon".

Iran’s government warned that its state security forces were ready with "fingers on the trigger" to confront any revival of anti-government protests. The country targeted several areas in Israel, Lebanon and the Gulf early on Wednesday as the war stretched into its 12th day.

This has raised expectations of a prolonged closure of the Strait of Hormuz despite earlier assurances from Trump. Iran’s Islamic Revolutionary Guard Corps has threatened to block oil shipments from the Gulf unless US and Israeli attacks stop.

2) Rupee declines

The Indian rupee declined 0.2% to Rs 92.0375 against the US dollar, compared with the previous close of Rs 91.8050. Investors are closely eyeing the Indian currency’s movements after it settled at an all-time low of 92.35 against the US dollar on Monday.

Notably, rupee has now closed past the key 92-mark.

3) FII selling continues

Foreign investors remained net sellers on Tuesday as well, net selling Indian equities worth Rs 4,672.64 crore yesterday. While this doesn’t reflect their trading behaviour today, persistent selling by foreign investors seen for the past several sessions dampens investor sentiment.

According to market data, FPIs net sold Indian equities worth more than Rs 21,800 crore in the first week of March. This came after the foreign investors remained net buyers of Indian equities in February.

4) Profit booking

The fall in stock markets today may have also been driven by profit booking. Indian stock markets had rebounded yesterday, with Sensex rising over 600 points and the Nifty closing above 24,250 as remarks by US President Donald Trump suggesting an imminent end to the Iran conflict and a fall in oil prices lifted sentiment after an incessant selloff.

Trump on Monday told CBS News that he thinks the war against Iran "is very complete" and that Washington was "very far ahead" of his initial four-to-five week estimated timeframe.

5) Oil prices surge

Oil prices rebounded today, with Brent crude futures rising nearly 6% to cross the $92 per barrel mark again. This comes a day after crude oil prices had significantly declined, falling below the $90 mark after a massive rally which saw prices crossing $110 level.

The sharp rebound comes as geopolitical tensions continue to halt traffic at Strait of Hormuz, a critical chokepoint for world trade.

What lies ahead?

Nifty 50’s immediate support was placed at 24,150 by Rupak De, Senior Technical Analyst at LKP Securities, which however has already been broken. The analyst had cautioned that a break below this level could trigger renewed selling pressure. “If the index slips below 24,150, it may decline further towards 23,800,” he had said.

“Nifty turned lower on testing the 24,300-24,370 region yesterday on anticipated lines. This would remain the breakout point, in order to consider the possibilities of 25,000. That said, yesterday’s hammer formation signals positivity, which will be retained as long as above 24,210. Downside marker may be placed near 24,050,” said Anand James, Chief Market Strategist at Geojit Investments.