Why did stock market crash today? Nifty50 ends below 23,800; BSE Sensex tanks over 900 points - top reasons for crash

Stock market crash today: Nifty50 and BSE Sensex tanked in trade on Thursday, a day after the stock market saw a record single day gain. While Nifty50 went below 23,800, BSE Sensex was down over 1,000 points intraday. Nifty50 closed the day at 23,775.10, down 222 points or 0.93%. BSE Sensex ended at 76,631.65, down 931 points or 1.20%.The stock market tanked on easing optimism around a US-Iran ceasefire, along with other concerns which weighed on investor sentiment.Among Sensex constituents, Infosys, Adani Ports, UltraTech Cement, HCLTech and L&T were the major laggards, declining by up to 2 per cent. On the other hand, Tata Steel, NTPC, BEL and Power Grid were among the key gainers.Market volatility also picked up, with the India VIX rising more than 6 per cent after a sharp 20 per cent drop in the previous session. Broader markets showed relative resilience, with midcap and smallcap stocks outperforming the benchmarks.Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited says, “The 2-week ceasefire between US and Iran and the consequent sharp decline in crude prices provided the trigger for a sharp 873 point rally in Nifty yesterday. The short-covering and accumulation in attractively valued financials facilitated the sharp surge in the market. Even though RBI’s monetary policy on expected lines with no change in rates and stance was not market boosting, the Governor’s comment that “growth impulses remain strong supported by robust private consumption and sustained investment demand” augurs well for the market.“With 6.9% GDP growth and 4.6% inflation projected for FY 27 by the RBI, the nominal GDP growth for FY27 can be around 11.5% which can deliver around 12% earnings growth in FY 27. With fair valuations in the market now, if the West Asian ceasefire holds, the market will remain resilient. But there are some concerns surrounding the Israeli attack on Lebanon and its fallout on the ceasefire. If crude again spikes in response to this development, the uptrend witnessed yesterday will be at risk of losing stream. The big takeaway from the rally in the market yesterday is that fairly valued stocks depressed by FPI selling and shorting will bounce back at any time. Patience is the key."Waning optimism over US-Iran ceasefireAlthough the US and Iran had agreed to a temporary ceasefire, which initially supported global markets, tensions remained high. Israel continued its parallel conflict against Iran-backed Hezbollah in Lebanon, while Iran accused both Israel and the US of breaching ceasefire terms, calling further negotiations “unreasonable”.The Strait of Hormuz, which was expected to reopen, continued to remain closed for shipping traffic. Oil prices climb past $95Crude prices moved higher on Thursday as expectations of the Strait of Hormuz reopening weakened. Brent crude futures rose more than 2 per cent to $96.70 per barrel, while WTI crude gained nearly 3 per cent to $97. This rebound followed a sharp decline a day earlier, when prices had dropped from around $110 to below $95 per barrel after the ceasefire announcement.Weak global cuesMost global markets traded lower as doubts persisted over the ceasefire taking effect. Japan’s Nikkei fell 0.8 per cent, Hong Kong’s Hang Seng slipped 0.2 per cent, South Korea’s Kospi dropped over 1.5 per cent, and China’s Shanghai Composite declined 0.7 per cent.Although Wall Street had ended the previous session with strong gains, Dow Jones futures were trading in the red, indicating a softer start for US markets.Continued FII outflowsForeign institutional investors remained net sellers of Indian equities, adding pressure on market sentiment. According to NSE data, FIIs extended their selling streak for the 26th straight session on Wednesday, offloading shares worth about Rs 2,812 crore. While this does not reflect current-day activity, sustained outflows in recent sessions have weighed on sentiment, even as domestic institutional investors continue to provide support.Rupee weakensThe rupee slipped against the US dollar after recent gains. In early trade, the currency declined by 16 paise to 92.70 per dollar. After a sharp fall in March, the rupee had recovered partially following steps taken by the RBI last week, including restrictions on banks offering rupee non-deliverable forwards to clients and curbs on companies rebooking cancelled forward contracts.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)