The Indian stock market witnessed a massive across-the-board selloff in morning trade on Thursday, 30 April, which dragged the benchmarks, the Sensex and the Nifty 50, lower by more than 1%.
The 30-share pack plunged nearly 1,150 points, or 1.5%, to an intraday low of 76,349, while the NSE counterpart crashed more than 350 points, or 1.6%, to the day’s low of 23,801.
The BSE 150 Midcap and the BSE 250 Smallcap indices also crashed more than 1% each.
Investors lost about ₹9 lakh crore as the overall market capitalisation of BSE-listed firms dropped to ₹460 lakh crore from nearly ₹469 lakh crore in the previous session.
Why is the stock market falling today?
Let’s take a look at 5 key factors behind the stock market crash today:
1. Escalating tensions between the US and Iran
While possible talks between the US and Iran remain stalled, there are reports of fresh escalation in tensions between the two countries.
The US is increasing its pressure on Iran. However, the West Asian country is refusing to back down.
According to a report by Fox News citing US officials, the United States Department of the Treasury has frozen more than $344 million in tied to Iran to cut off Tehran’s access to global revenue streams.
Moreover, a report suggested that the US Central Command has asked to send the Army’s long-delayed Dark Eagle hypersonic missile to the Middle East for possible use against Iran.
Russian President has warned the US of “damaging consequences” of a new military action in Iran, a Kremlin aide told reporters Wednesday after the two leaders spoke by phone.
2. Brent Crude above $120 per barrel
Sharp jump in also contributed to the massive selloff in the stock market. Brent Crude prices jumped to the highest levels since 2022, trading above $120 per barrel, raising the risk of inflationary pressures.
For a large oil importer like India, the situation is more alarming as it can have a serious impact on the country’s growth and inflation trajectory.
3. Rupee falls to record low
The declined by 32 paise to an all-time low of 95.20 against the US dollar in early trade on Thursday, due to a sharp jump in crude oil prices.
The domestic currency appears set to witness its third consecutive weekly loss, having erased nearly all gains achieved earlier in the month after the central bank implemented rare measures to reduce excessive speculation.
The rupee’s weakness can accelerate foreign capital outflow from the Indian market, weighing on sentiment.
4. Hawkish US Fed
The on 29 April kept the benchmark interest rate steady as expected. However, Fed Chair Jerome Powell’s slightly hawkish tone seems to have worried markets.
Powell warned of inflationary pressures and said the impact of higher energy prices cannot be assessed at this juncture. This indicated the Fed could be in a pause mode for interest rates for a longer period.
According to Reuters, traders are expecting no rate cuts this year and even see a 30% chance of a hike by March 2027.
5. Relentless FII selling
Foreign institutional investors (FIIs) have been selling Indian stocks aggressively, weighing on market sentiment. After buying for a few days in the middle of this month, they have again turned sellers and have been selling Indian stocks for the last eight consecutive sessions in the cash segment.
On a monthly basis, FIIs have been selling Indian stocks in the cash segment since July last year, with April’s selloff exceeding ₹62,000 crore.
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