The Indian stock market selloff extended to the third straight session on Friday, 24 April, with the benchmarks — the Sensex and the Nifty 50 — crashing by 1% each during the session.
The 30-share pack tumbled more than 800 points, or 1%, to an intraday low of 76,829, while the Nifty 50 plunged by 1% to the day’s low of 23,937.
Investors lost more than ₹4 lakh crore as the overall market capitalisation (m-cap) of BSE-listed firms dropped to ₹462 lakh crore during the session from ₹466 lakh crore in the previous session.
In just three consecutive sessions, the has plunged more than 2,400 points, or 3%, while the NSE barometer has crashed 2.6%. Investors have become poorer by ₹7 lakh crore in three days, as the cumulative m-cap of BSE-listed firms stood at ₹469 lakh crore on 21 April.
Why is the stock market falling?
Let’s take a look at five key factors driving the strong selloff in the Indian stock market:
1. Uncertainty over a potential US-Iran peace deal
The market is reeling under selling pressure due to the absence of clear signs that a peace deal between Washington and Tehran could be finalised soon.
Despite a ceasefire, both countries have not shed their aggression against each other. According to media reports, US President said on Thursday that he has ordered the military to “shoot and kill” small Iranian boats deploying mines in the Strait of Hormuz.
On the other hand, Masoud Pezeshkian on Thursday said all Iranians are standing together against any external aggression to make the aggressor regret his actions.
“The market has been continuously responding to bad news and hopes emanating from a potential deal on the West Asia conflict. A mid to long-term market direction will emerge only from clarity on the conflict resolution, particularly on the opening of the Hormuz Strait. Till then, crude price will continue to fluctuate, impacting the market in the process,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
2. Oil prices jump 18% this week
Crude have been on a strong uptrend this week, rising almost 18%, as the second round of talks between the US and Iran did not take place, with neither side arriving in Pakistan. Further, the possibility of peace deals also remains shrouded by uncertainties.
The Strait of Hormuz, a key waterway through which nearly 20% of global petroleum liquids consumption flows daily, remains largely closed.
Higher crude oil prices are not just an immediate headwind for the market. Experts say investors are worried about the second-order impact of oil price volatility, which may materialise as a hit to Q1FY27 earnings.
3. Rupee below the 94 mark
The Indian rupee has fallen below the 94-per-dollar mark once again, weighing on market sentiment.
As per a PTI report, the Indian currency fell 24 paise to 94.25 against the US dollar in early trade on Friday, extending its downward streak to a fifth consecutive day.
4. Strong foreign capital outflow
After buying Indian equities for a few days this month, foreign institutional investors (FIIs) have resumed aggressive selling.
Over the last four sessions, FIIs have sold Indian stocks worth over ₹8,300 crore in the cash segment.
“FPIs have again turned sellers this week after buying for three days last week. This, along with the spike in crude oil prices, has again dragged the rupee below 94. If this trend of FPI selling continues, large caps will continue to be weak,” said Vijayakumar.
5. Technical factor
The Nifty has breached its key support at 24,000. Even though the market appears oversold, technical experts see the possibility of further downside.
According to Shrikant Chouhan, the head of equity research at Kotak Securities, the 50-day SMA (simple moving average) or 24,300 would act as an immediate resistance zone.
“Below 24,300, the correction wave is likely to continue. On the downside, the index could slip to 24,000. Further downward movement may continue, potentially dragging the index to 23,900. On the upside, a move above 24,300 could lead to a bounce back towards 24,450–24,500,” said Chouhan.
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