Sensex down 800 points, Nifty below 26,000 — Why is stock market down today?
India’s stock market suffered a late sell-off today, with the benchmark indices tumbling sharply, wiping out over ₹7 lakh crore of investor wealth in the process.
The 30-share S&P BSE Sensex fell more than 800 points, dragging the Nifty 50 below the psychological 26,000 mark. The severity of the slump was amplified in the broader market, where the BSE Midcap and Smallcap indices fell by over 2% each.
To be sure, the correction was not triggered by a single event but rather a confluence of global cautiousness and persistent domestic headwinds that forced traders and foreign investors to rush for the exit.
1. US Fed jitters: The main driver was the extreme caution ahead of the US Federal Reserve’s interest rate decision (FOMC meeting). The possibility of the Fed maintaining a hawkish stance or a surprise outcome led to aggressive de-risking. A stronger US dollar resulting from US Fed policy puts immense pressure on emerging markets.
2. Relentless FII outflows, weak Rupee: The rupee is at near all-time lows against the US dollar (around ₹90.38). This severe currency depreciation directly erodes the returns for foreign institutional investors (FIIs), compelling them to sell their equity holdings. This selling pressure creates a negative feedback loop, causing a rapid Sensex fall.
3. Rising crude oil prices: Increased global crude oil prices heighten India’s import bill and fuel inflationary pressures. Moreover, the lingering uncertainty surrounding the India-US trade deal dampened investor sentiment, particularly in trade-sensitive sectors.
4. Midcap and Smallcap carnage: The sell-off was acutely felt in the broader market, with Midcap and Smallcap indices crashing over 2%. This suggests a profit-booking and flight to safety, where investors shed riskier, smaller stocks first.