Sensex tanks 1,400 points. 5 reasons why India’s stock market fell today

Stock market crash: The selling pressure in the Indian stock market intensified during Friday’s dealings. The Nifty 50 index opened downside at 22,433 and finished at 22,117, after touching an intraday low of 22,104. After ending at the 22,117 mark, the 50-stock index recorded an intraday loss of around 425. The BSE Sensex today opened lower at 74,201 and ended at 73,192 after touching an intraday low of 73,141 mark, logging an intraday loss of around 1,400 points in the early morning session. The Bank Nifty index also had a downside opening at 48,437 and finished at 48,262 after hitting an intraday low of 48,078. While ending at 48,262, the frontline index recorded an intraday loss of around 480 points. All sectors were trading red, while IT, tech, auto, and telecom received maximum beating in today’s bloodbath on Dalal Street.

Today’s selling was across segments as the broad market witnessed more selling pressure than the frontline indices. The BSE Small-cap index crashed around 2.35 per cent, while the BSE Mid-cap index lost close to 2 per cent during Friday deals. Patanjali Foods, Granules India, Aditya Birla Real Estate, Deepak Fertilisers, Redington, etc. were among the top losers. However, shares of KEI Industries, Star Health and Allied Insurance Company, Polycab India, IEX, RR Kabel, Coal India, etc., witnessed strong buying despite the stock market crash. 

After the end of Friday session, 106 BSE-listed stocks had touched the upper circuit, whereas 471 BSE-listed stocks were locked in with the lower circuit. Likewise, 51 BSE-listed stocks had touched a 52-week high, while 908 BSE-listed stocks had touched a 52-week low.

Why is the Indian share market falling today?

According to stock market experts, the Indian stock market is falling for these five crucial reasons: buzz about weak earnings by Indian banks, MSCI rejig, DIIs stuck at higher levels, rising US bond yield, and FIIs moving from India to China.

Stock market crash: Top 5 reasons

1] Buzz about the hit on earnings of Indian banks: Avinash Gorakshkar, Head of Research at Profitmart Securities, said, “There is buzz that Q4 earnings of the Indian banks are expected to come below market estimates. This is intensified selling in the Indian stock market on Friday as the Q3FY25 earnings season was highly disappointing, and the market cannot digest this disappointing news in current conditions.” Gorakshkar said that 30% of the strength in the Nifty 50 index belongs to banking stocks, and this dip in the Nifty 50 and Sensex today can be attributed to this buzz.

“If earnings of the Indian banks come weak in Q4FY25, then even RBI’s rate won’t be enough to inject liquidity in the Indian markets,” Gorakshkar said.

2] DIIs stuck at higher levels: Avinash Gorakshkar of Profitmart Securities said that FIIs are continuously selling in the Indian markets. Still, DIIs are not coming forward as we used to see earlier. A major reason for this non-challenging DIIs to the FIIs’ selling is their positions at higher levels. DIIs are stuck at higher levels, so they are in no hurry to reposition themselves until they get a clear picture of the markets.

3] MSCI rejig: “The upcoming MSCI rejig is also a reason for the stock market crash on Friday. Trade volume may be affected after this rejig, as does the inflow and outflow of money into a particular stock. So, DIIs and FIIs are expected to rebalance their positions ahead of the MSCI rejig,” said Anshul Jain, Head of Research at Lakshmishree Investment and Securities.

4] Rising US bond yield: Avinash Gorakshkar of Profitmart Securities believes that FIIs are continuously selling in the Indian market by squaring off their positions as they get better returns in the US bond market. So, they are switching their money into the US bond market after Donald Trump, the 47th President of the United States of America (USA), was inaugurated. He said FIIs’ selling may not end until the tariff flare is around.

5] FII’s shifting money from India to China: VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “After Trump’s victory in US presidential elections, the US market has been attracting huge capital inflows from the rest of the world. Recently, China has emerged as a major destination for portfolio flows. The Chinese president’s new initiatives with their leading businessmen have kindled hopes of a growth recovery in China. The Chinese stock market responded positively to this.” 

He said that Chinese stocks are available at attractive valuations, and hence, the ‘sell India buy China’ rant has taken centre stage among FIIs.

“China’s recent rally can be attributed to a blend of factors, with its economic stimulus having an overarching impact on the economy. China has stabilised its economy, including rate cuts, property sector support, and liquidity injections. These moves have helped restore investor confidence, particularly after prolonged policy tightening,” said Vaibhav Porwal, Co-Founder of Dezerv.

Nifty 50, Sensex to Bank Nifty: Key levels to watch

“The Nifty 50 index has broken below 22,200 support. Now, the frontline index may try to test the next support placed at the 21,750 to 21,800 range. Sensex today has immediate support at 73,000. A decisive breaking below this support would mean the 30-stock index heading for the next crucial support placed at 72,000. However, Bank Nifty today has crucial support placed at 47,800, which is expected to remain sacrosanct support for the frontline index,” said Anshul Jain of Lakshmishree Investment and Securities.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.