There was a big fall in the Indian stock market after US President Donald Trump’s statement that the ceasefire with Iran was ending. Due to which there was an increase in the prices of crude oil and due to geopolitical tension the confidence of investors decreased. Due to this reason, Sensex saw a fall of more than 1700 points. Due to this fall, stock market investors lost about Rs 9 lakh crore. Selling intensified in other parts of the trade after US President Donald Trump said the interim agreement to end the war with Iran is “over”. This gave rise to concerns of increasing tension in the Middle East.
Around 2 pm, the Sensex fell 1,700 points to 76,472.78, while the Nifty50 saw a decline of 438 points and fell below the 24,000 level. Due to this fall in the market, the wealth of investors was reduced by about Rs 9 lakh crore, due to which the total market capitalization of all the companies listed on BSE came down to Rs 471 lakh crore.
Shares of all Sensex companies declined. Shares of Hindustan Unilever, InterGlobe Aviation, Maruti Suzuki, Kotak Mahindra Bank, Bharat Electronics and Bharti Airtel were the biggest losers with a fall of 2-4%. India VIX, which measures market volatility, rose 26% to 14.67 amid heavy selling on Dalal Street. Nifty Midcap 100 index and Nifty Smallcap 100 index declined by up to 2%.
There was a huge fall in all the sectoral indices, in which Nifty Bank Index, Nifty FMCG Index and Nifty Oil & Gas Index recorded a decline of more than 2%. The overall trend of the market was quite negative. On the NSE, 2,525 shares declined, while only 694 shares advanced and there was no change in 86 shares.
Due to these reasons the stock market declined
1. Ceasefire ends with Iran
US President Donald Trump said the deal with Iran “is over” and described Iranian leaders as “sick-minded people”. This statement came after a new round of attacks in the Gulf region. Tension has increased again between the two countries. A day ago there was news that Iran had targeted some shipments. After that, on Wednesday, America also started bombing Iran and reimposed sanctions on the sale of Iranian crude oil. The increase in tensions has again raised concerns about stability in the Middle East and new disruptions in global oil supplies.
CENTCOM said in a post on X that US Central Command forces have launched several vigorous attacks against Iran. This action has been taken to extract a heavy price for targeting and attacking commercial ships carrying innocent civilians in international waterways. According to US Central Command, these attacks were carried out in response to attacks by Iran on three commercial ships passing through the Strait of Hormuz.
2. Oil prices increased
On Wednesday, Brent crude futures rose nearly 5 percent to $78.09 a barrel, while WTI crude futures rose nearly $74 a barrel. In fact, US President Donald Trump had announced that the ceasefire with Iran was “over”. This increased the possibility of supply disruptions through the Strait of Hormuz, an important global route for oil shipping.
3. Weak signals from global markets
Amid increasing geopolitical tensions, the impact of the massive selling in global markets was also visible on Dalal Street. European markets fell after Trump’s statements. UK’s FTSE 100, France’s CAC 40 and Germany’s DAX fell up to 2%. In Asia, Japan’s Nikkei fell 1.5 percent, while South Korea’s Kospi slipped 6 percent as selling intensified in the chip sector. Meanwhile, Dow Jones futures fell nearly 1 per cent after Wall Street fell sharply overnight, suggesting that US markets could again start the day on a weak note.
4. Increase in bond yields
US Treasury yields increased, increasing pressure on equities. The benchmark 10-year Treasury yield rose to 4.565%, while the 30-year bond yield rose to 5.068%. The policy-changeable two-year Treasury yield rose to 4.197%.
Typically, rising bond yields make fixed-income assets more attractive than equities, driving investors away from riskier assets like stocks.
5. Rupee weakened
The Indian rupee weakened below 95.50 against the US dollar. Rising crude oil prices and strengthening of the dollar put pressure on the domestic currency, causing it to fall 0.6 percent from the previous closing price. Jatin Trivedi, vice president, research analyst (commodity and currency) at LKP Securities, expected the rupee to trade in the range of 94.6095.30, and crude oil prices and foreign fund inflows would be the key factors to keep an eye on. Breaking of 95.30 level is a sign of increasing pressure on the domestic currency.
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