Market fall explained: Sensex dives 995 points intraday, Nifty at 22,500

VK Vijayakumar of Geojit Investments said that market has turned decisively weak amid reports of possible renewed strikes by the US on Iran after the midterm elections in the US.

Stock market crash today: Stock market benchmark indices Sensex and Nifty 50 tumbled in trade on Wednesday, dragged by IT companies, rising crude oil prices and caution ahead of the US Federal Reserve's policy decision.

 

The 30-share BSE Sensex opened in the red and extended losses to make an intraday low of 72,603, down 995 points, or 1.35 per cent. Likewise, the Nifty 50 index tumbled 252 points, or 1.11 per cent, to make a low of 22,497.

 

VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said that the market has turned decisively weak amid reports of possible renewed strikes by the US on Iran after the mid-term elections in the US. Brent crude has again firmed up to above $115, which is bad news for the Indian economy and markets. 

 

 

"There are two important conditions for the Indian market to revive. First, crude prices have to decline, but that remains unclear. Second, FPIs have to stop their relentless selling and turn buyers. For this to happen, changes to LTCG tax appear inevitable now. There is a high probability of this happening since the massive FPI outflows ($19 billion in 2025 and $31 billion so far this year) have started hurting India’s otherwise good macros," he said.

 

As of 10:45 AM, both benchmark indices were trading near the day's lows. The Sensex was down 787 points, or 1.07 per cent, at 72,810, while the Nifty 50 declined 199 points, or 0.81 per cent, to 22,575.

 

Sectorally, only the Nifty Auto and Nifty Pharma indices traded in the positive territory, while remaining fell up to 3.5 per cent, led by the Nifty IT, Nifty Oil & Gas, and Nifty FMCG. The broader market indices, however, showed resilience and traded on a mixed note. 

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Stock market crash today: Key reasons

 

Crude prices: Oil prices rose on Wednesday after an attack on a refinery in Saudi ​Arabia, the world's biggest crude exporter, renewed ​concerns around the risks to supply in West Asia stemming from the conflict with Iran and its proxies. At the last check, Brent crude futures rose 1.45 per cent to $115.5 a barrel. US West Texas Intermediate crude rose 1.49 per cent to  $101.4. READ MORE

 

"Investors are tracking movements in global markets and energy prices. Crude continues to trade higher, keeping concerns over sustained cost pressures and the broader economic outlook in focus," Ponmudi R, CEO of Enrich Money, said.

 

IT stocks sink: IT stocks succumbed to selling pressure during Wednesday's trade due to renewed concerns over the impact of AI. Gaurav Sharma, vice president & head of research, Globe Capital, said that the IT index, which fell 3.5 per cent, is underperforming following Microsoft’s announcement of a steep workforce reduction. This highlights the ongoing transformation in the IT industry, driven by AI developments, where India is still lagging to some extent.

 

However, Gaurav said that he sees this as a knee-jerk reaction and believes that the trend will not persist. "Over the past two quarters since the AI spending boom began, Indian IT companies have reported reasonable numbers. AI-related orders have also remained healthy and have started making a positive impact on their financial statements," he said.

 

US-Iran tension: According to Vijayakumar, reports that US President Donald Trump could take an unexpected turn in his Iran strategy after the midterm elections are keeping markets on edge. Notably, media reports suggest that the US and Israel may carry out another military operation against Iran after the midterm elections.

 

"There can be unexpected developments in the Middle East, with consequences for crude prices," Vijayakumar said, adding that value buying opportunities should not be missed.

 

Fed meeting: According to Bajaj Broking, equities are likely to remain cautious ahead of the US Federal Reserve's policy decision. Along with the Fed decision, market participants will closely monitor the Bank of Japan’s rate decision later this week. On the macroeconomic front, US GDP data will be a key focus. "The market is likely to remain cautious ahead of the US Federal Reserve’s policy decision, with investors closely tracking the inflation outlook and signals on the future trajectory of interest rates. The expectation is that the Fed will keep rates unchanged in October, but the key focus will be on its commentary and the possibility of further tightening in December," Thomas Priju, Portfolio Manager, Karma Capital, said. 

 

FII selling: Gaurav said that FIIs have been selling Indian equities for quite some time. US bond yields have once again started moving higher, with the 10-year yield rising to around 5.42 per cent after correcting from 5.38 per cent to 4.9 per cent over the previous few sessions. The renewed rise in US bond yields could put further pressure on Indian equities, as higher yields tend to make US assets more attractive to foreign investors.

 

Notably, FIIs remained net sellers for the tenth straight week (last week). As per the data, FIIs have sold a net ₹514.66 billion against DII net buying of ₹591.10 billion in October so far.  

Disclaimer: Views and outlook in this report belong to the brokerages and analysts cited. They do not reflect the views of Business Standard. Readers are advised to exercise discretion.