Why is the Stock Market Falling Today? Sensex, Nifty crash over 3% in 3 sessions; Rs 11 lakh crore wiped out

Stock Market Crash Today: Indian equity markets remained under pressure for the fourth straight session on Tuesday, as investors continued to stay cautious amid rising crude oil prices, persistent foreign fund outflows, weakness in the rupee and uncertainty surrounding global geopolitical tensions.

At 12:38 pm IST, the 30-share BSE Sensex was trading at 74,963.87, down 1,051.41 points or 1.38 per cent. The Nifty 50 also declined 297.90 points, or 1.25 per cent, to 23,517.95.

The sharp fall has significantly dented investor wealth over the past few sessions. The market capitalisation of BSE-listed companies declined to nearly Rs 463.37 lakh crore from Rs 474.65 lakh crore recorded at the close of trade on May 7, resulting in an erosion of more than Rs 11 lakh crore.

During the last three trading sessions alone, the Sensex has dropped 2,568 points, or 3.3 per cent, while the Nifty 50 has fallen 709 points, or 2.9 per cent.

What is weighing on the market?

1)Concerns after PM Modi’s remarks

Investor sentiment turned cautious after Prime Minister Narendra Modi called for restraint in consumption amid global uncertainties. His appeal to reduce discretionary spending on fuel and avoid buying gold for a year sparked concerns that inflationary pressures and external risks may remain elevated for longer than expected.

2)Crude oil prices remain elevated

One of the biggest concerns for the domestic market continues to be the rise in crude oil prices. Brent crude has been trading above the $100 per barrel mark for more than two months.

Higher oil prices increase India’s import bill and put pressure on inflation, the rupee and fiscal balances. Analysts say sustained high crude prices could impact economic growth if they continue for an extended period.

3)Rupee weakens to record low

The Indian rupee fell another 35 paise on Tuesday to touch a record low of 95.63 against the US dollar. The domestic currency has weakened more than 6 per cent so far this year, largely due to higher crude prices and continuous foreign capital outflows. A weak rupee also raises concerns over imported inflation and higher costs for companies dependent on overseas inputs.

4)Foreign investors continue selling

Foreign portfolio investors have remained heavy sellers in Indian equities. Since July last year, FPIs have pulled out nearly Rs 4.5 lakh crore from the cash market.

So far in May, overseas investors have sold shares worth around Rs 19,500 crore, adding to pressure on benchmark indices.

5)Global uncertainty adds to volatility

Markets are also reacting to uncertainty surrounding the US-Iran situation. Concerns over the stability of the ceasefire and fears of renewed tensions have kept global investors on edge.

US President Donald Trump recently indicated that the ceasefire remained fragile, while Iran said it was prepared to respond to any escalation. The developments have kept oil prices elevated and reduced appetite for riskier assets globally.

6)Rising US bond yields hurt emerging markets

The rise in US Treasury yields and the strength in the dollar are further impacting emerging markets such as India. The US 10-year bond yield has risen to around 4.42 per cent from 4.15 per cent at the end of last year. Higher yields in the US generally lead global investors to shift money away from emerging markets into safer American assets.

Market participants believe volatility may continue in the near term unless crude oil prices cool and geopolitical tensions ease.