Indian Stock Market Crashes Over 1,000 Points: Key Reasons Behind Sensex Fall – Know Why Markets Fell Today?

Indian stock market crashes as Sensex loses over 1,000 points, driven by rising crude oil prices, weak rupee, FPI outflows, and slowing economic growth.

The Indian stock market witnessed a significant selloff on Monday, with the Sensex dropping over 1,000 points. This marked the fourth consecutive day of declines, reflecting investor concerns across multiple factors. Below is a detailed breakdown of the day’s developments and the key reasons behind the decline:

Key Market Movements:

• Sensex: Opened at 76,629.90, down from its previous close of 77,378.91. It hit an intraday low of 76,249.72 before closing 1,049 points lower at 76,330.01, a decline of 1.36 per cent.
• Nifty 50: Opened at 23,195.40, compared to its previous close of 23,431.50. It fell 384 points to an intraday low of 23,047.25 and closed 346 points lower at 23,085.95, a decline of 1.47 per cent.
• Market Capitalisation: The total market capitalisation of BSE-listed companies fell to Rs 417 lakh crore, down from Rs 430 lakh crore in the previous session. Investors lost Rs 13 lakh crore in a single day, with a cumulative loss of Rs 25 lakh crore over the past four sessions.

Reasons Behind the Fall:

1. Rising Crude Oil Prices:
   Crude oil prices surged to their highest level in over three months, driven by concerns over reduced supplies due to sanctions. Higher crude oil prices negatively affect India’s fiscal health as it is a major importer. This adds to inflationary pressures, weakens the rupee, and impacts investor sentiment.
2. Rupee Depreciation:
   The Indian rupee fell to an all-time low of 86.59 against the US dollar. This depreciation was fueled by elevated crude oil prices and a strong US dollar, which also impacted foreign investments. The dollar index reached 109.72, and 10-year US bond yields touched 4.76 per cent.
3. Foreign Portfolio Investor (FPI) Selling:
   FPIs continued to sell Indian equities aggressively. In January, they offloaded stocks worth Rs 21,350 crore as of January 10. This follows Rs 16,982 crore sold in December, with cumulative outflows reaching Rs 1,76,419 crore since October last year.
4. Concerns Over Union Budget 2025:
   Investors are cautious ahead of the Union Budget 2025, especially with expectations of fiscal prudence. Any populist measures might disappoint the market and add to volatility.
5. Uncertainty Around Global Trade Policies:
   Speculations about potential higher tariffs and protectionist policies created apprehensions about global trade, adding pressure on export-driven sectors.
6. Muted Q3 Earnings Expectations:
   Weak performance in Q1 and Q2 has lowered expectations for Q3. While a rebound is anticipated in Q4, sectors dependent on exports may benefit from the weakening rupee, but broader recovery remains uncertain.
7. Weakening Economic Growth:
   India’s GDP growth for the current financial year is projected at 6.4 per cent, the lowest in four years. Slowing growth has raised concerns about valuations, leading to further selling pressure.
8. Slim Hopes of US Fed Rate Cuts:
   Strong economic data from the US has diminished hopes for a rate cut. Rising US bond yields and expectations of higher inflation have contributed to the selloff in emerging markets like India.

Conclusion
The combination of global factors, weak domestic sentiment, and economic concerns led to significant market declines today. Investors remain cautious as they await clarity on global and domestic economic policies, earnings recovery, and fiscal measures in the upcoming Union Budget.

Disclaimer: The article is for informational purposes only and not investment advice.