Why did market fall today? Sensex slumps 440 points, Nifty closes below 24,250. 6 factors behind the selloff

The Indian stock market closed in the deep red on Monday, with Sensex and Nifty falling up to 0.6% after recording sharp gains in the previous session as Iran-US war escalations and rising oil prices spooked investors.

Sensex fell nearly 443 points to close at 77,708, while Nifty 50 declined around 96 points to close at 24,238 on Monday. This came even as India VIX, which measures market volatility, dropped around 2% to 12.90.



Axis Bank and HDFC Bank shares crashed more than 5% each to lead losses on the Sensex after Q1 earnings of these heavyweight private lenders failed to impress the market. Kotak Mahindra Bank and Maruti Suzuki shares followed, dropping more than 2% each. Bucking the trend, Zudio-parent Trent shares rallied over 3%, while Power Grid, NTPC, SBI, UltraTech Cement and Bharti Airtel shares gained nearly 2% each.

Broader markets outperformed benchmarks, with Nifty Midcap 100 and Nifty Smallcap 100 indices rising up to 0.6% despite largecap indices Sensex and Nifty closing in the red. Sectorally, the Nifty Private Bank index crashed more than 2% to lead losses. Nifty PSU Bank index jumped around 3%.

The overall market breadth was slightly positive, with the NSE seeing 1,779 advances and 1,501 declines, while 110 stocks remained unchanged.

Here are six key factors that are pushing the stock market down today:

1) Iran-US war escalations

The conflict between Iran and the US continued to escalate further over the weekend. The US conducted a ninth straight night of attacks against Iran, while US allies Kuwait and Bahrain reported more Iranian strikes.

The Islamic Revolutionary Guard Corps said on Monday that two oil tankers ⁠had exploded and been immobilised after attempting to transit what it described as an unsafe southern route through the Strait of Hormuz, alleging they had been encouraged by the U.S. military to use the passage.

2) Oil jumps above $90/barrel

As a result of the escalating Iran-US war, oil prices sharply jumped. Brent crude futures gained more than 2%, to $90.19, touching the highest since June 11 and extending gains after rising 15.9% last week, its biggest weekly gain since April.

US West Texas Intermediate crude was at $84.20 a barrel, up more than ‌2% to the highest level ⁠since ⁠June 12. The rising oil prices come as the raging conflict has restricted oil shipments through the Strait of Hormuz, a critical waterway that accounted for 20% of daily global oil and gas supply shipments before the war.

3) Weak global cues

The bearish sentiment on Dalal Street comes amid an overall global market downturn. Japan’s Nikkei and South Korea’s Kospi crashed up to 5% on Monday. Taiwan Weighted, meanwhile, was trading in the red with marginal losses.

Wall Street also recorded a sharp downturn in the previous session. S&P 500 and the tech-heavy Nasdaq dropped more than 1% each on Friday, while the Dow Jones Industrial Average fell nearly 0.8%. For the week, the S&P 500 ended down 1.55% while the Nasdaq fell 2.9% and the Dow lost 0.93%.

4) Bank stocks plunge after Q1 earnings

The bearish market undertone was led by a sharp selloff in heavyweight bank stocks after their respective Q1 earnings failed to meet expectations. Axis Bank and HDFC Bank shares crashed more than 5% each, while Kotak Mahindra Bank shares dropped over 2% to lead losses on the Sensex.

These heavyweight private lenders had announced their June quarter results on Saturday, with the stocks reacting to the earnings print today.

5) Bond yields rise

US Treasury yields rose, further dampening equity market sentiment. The yield on benchmark US 10-year notes rose to 4.551% while the 30-year bond yield rose to 5.073%. The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose to 4.183%. Rising bond yields typically make bonds more attractive to investors, which in turn can lead to a downtrend in markets.

6) Rupee declines

The Indian rupee dropped to its weakest ​level in two months ​on Monday, as escalating Iran-US war pushed oil prices over $90 per ​barrel. The rupee fell 14 paise to close at 96.44 against the US dollar. “Persistent FII outflows also continued to weigh on the domestic currency, while renewed US-Iran tensions over the weekend added to global risk aversion and kept energy prices firm,” said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities.

“Market participants are now shifting their focus to the US Federal Reserve's interest rate decision on 29 July, which will be a key driver for the US dollar and emerging market currencies. Until then, the rupee is expected to remain under pressure, with a weak bias likely to persist in the near term,” the analyst added.


What lies ahead?

The collapse of the June ceasefire between the US and Iran has pushed crude prices to touch $90, and as a result, markets have started the week on a cautious note, reflecting rising pressure on the global economy, said Vinod Nair, Head of Research at Geojit Investments.

He noted that these tensions are expected to persist in the near term as US military actions expand and global travel advisories for US citizens remain in place. This environment is likely to influence central bank policies in the second half of the ongoing 2026, with most central banks maintaining a hawkish stance, he added.

“The probability of future rate hikes is increasing as inflation and global bond yields continue to trend higher. At the same time, the initial set of Q1 earnings has been encouraging, driven largely by PSU banks, oil & gas and metals. While mid-cap and small-cap stocks outperformed their large-cap peers, supported by resilient earnings growth expectations and improving business momentum, further reinforcing opportunities for selective stock picking in the broader market, despite prevailing geopolitical headwinds,” the analyst said.


Technical view on Nifty

Going ahead, SBI Securities sees Nifty finding immediate resistance in the 24,370-24,400 zone on the upside. Any sustainable move above this zone could result in Nifty extending its pullback towards 24,550, followed by 24,700 in the short term, it said.

On the downside, the brokerage expects the benchmark index to find immediate support in the 24,130-24,100 zone.


(With inputs from agencies)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)