Why is market falling today? Sensex plunges over 750 pts, Nifty below 23,800. Key factors behind Rs 5 lakh crore wipeout

The Indian stock market slipped into the deep red on Wednesday, with Sensex and Nifty falling around 1% in the morning as escalating US-Iran tensions, soaring oil prices and other factors spooked investors.

After opening, Sensex dropped over 750 points to fall below 76,200 while Nifty 50 plunged over 200 points to slip below 23,800 level. The sharp drop in the stock market wiped off nearly Rs 5 lakh crore from the total market capitalisation of BSE within minutes from opening, dragging it down to Rs 488 lakh crore.

Infosys shares plunged nearly 3% to lead losses on Sensex, while TCS, HCLTech, IndiGo and M&M shares dropped nearly 2% each. HDFC Bank, NTPC, Tech Mahindra, Asian Paints, Bajaj Finance, Bharat Electronics (BEL), ITC and UltraTech Cement shares meanwhile fell over 1% each. Sun Pharma and Adani Ports shares were the only two stocks in the green, trading with marginal gains.


India VIX, which measures volatility in the stock market, sharply jumped more than 3% to 11.86 in the morning. Meanwhile, the broader markets also plunged, with Nifty Midcap 100 and Nifty Smallcap 100 dropping nearly 1% each, at par with the benchmarks.

Among the sectors, Nifty IT was the top loser, crashing more than 2%, while Nifty Auto and Nifty Realty dropped nearly 2% each. Nifty FMCG, Nifty Financial Services and several other sectoral indices fell 1%. The overall market breadth turned sharply negative, with NSE seeing 2,151 declines against 641 advances, while 79 stocks remained unchanged.

Here are the 5 key factors pushing market down today.

1) Iran-US conflict escalates

US and Iran exchanged fresh strikes overnight, further dampening hopes for the raging conflict in the oil-rich Middle East coming to a conclusion. The US said it had launched a series of airstrikes against targets in Iran, prompting a ​response from Tehran. This marks one of the most serious escalations of the conflict between the two countries in weeks.

The Islamic Revolutionary Guard ​Corps (IRGC) meanwhile said the American attacks would further restrict traffic through the Strait of Hormuz, a critical waterway that carried about one-fifth of the global oil consumed before the conflict and which Iran has effectively closed ​to commercial shipping. It also said it has targeted a US military base ​in Jordan with ballistic missiles that killed a large ​number of American forces, while Iranian state media reported a large-scale drone attack on a US base in Bahrain in response.

2) Oil prices soar above $95/barrel

As a result of the fresh escalation in the Middle East conflict, oil prices sharply soared overnight, marking the largest ‌gain since late July. Brent crude futures jumped above $95 per barrel, while WTI Crude futures were trading close to $91 per barrel.

"The ⁠oil market is no longer pricing just the risk of war; it is increasingly pricing the cost of an unresolved war," Reuters quoted Priyanka Sachdeva, Phillip Nova's head of market insights. "Until there is clear evidence that ​negotiations can produce a lasting resolution and that normal oil flows through the Strait are returning, the risk premium in crude is likely to remain elevated."


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