Why Stock Market Is Down Today? 8 Reasons Behind Sensex’s 1,740-Point Crash and Nifty’s 2% Fall

Stock Market Today: Indian equity markets witnessed a sharp sell-off on Wednesday, July 8, as investors turned cautious on a combination of global as well as domestic developments. Rising tensions in West Asia, a jump in crude oil prices and profit booking after the recent rally triggered heavy selling across the sectors.

At 2:39 pm, the BSE Sensex was down 1,740.48 points or 2.23%, at 76,440.24, while the Nifty 50 was down 542 points or 2.22%, at 23,856.70.

This is the second day in a row of losses for the market, which had won for four straight sessions before Tuesday.

So what is really pulling the market down? Here are the eight biggest reasons.

1. Fresh Tension In West Asia Jitter Investors

The main cause for today’s decline is the renewed conflict in West Asia.

New U.S. strikes against Iran stoked fears that the conflict could spill further, hurting investor confidence. Washington also withdrew an Iranian licence to export oil after attacks on commercial tankers in the Strait of Hormuz.

“We attacked very powerfully last night, the very dangerous people from Iran,” said US President Donald Trump, adding that he thought the Memorandum of Understanding with Iran was effectively finished. “They’re sick, there’s something wrong with them.” Trump on the MoU: “I think it’s over”.

Usually, when geopolitical tensions rise, investors become more cautious and cut their equity exposure.

2. Crude Oil Prices Rising, Weighing On Market Sentiment

Oil prices rose due to uncertainty in West Asia.

Brent crude gained 4.25% to $77.31 a barrel and WTI crude was up 4.22% to $73.41 a barrel.

This development is a concern for India as the country imports most of its crude oil requirements. Higher oil prices can raise transportation and manufacturing costs, increase inflation and crimp corporate profits. That’s often a drag on the stock market.

3. Investors Book Profits After Big Rally

The market has staged a sharp rally over the past few trading sessions.

The Nifty had climbed around 700 points since the end of June, touching an intraday high of 24,530 before Tuesday’s fall.

Many investors preferred to book profits rather than take fresh risks after such a rally, especially with the June quarter earnings season around the corner.

4. The Market Did Not Break Through A Key Level

Traders were watching a key technical level, beyond global concerns.

Nifty managed to cross 24,500 briefly on Tuesday but was unable to hold. That sent short-term traders into selling.

Many market participants also believed that the recent rally had gone a bit too far in a short period of time, leading to more selling during Wednesday’s session.

5. Heavy Selling In Banking Stocks

Leading the recent rally, banking stocks were among the biggest losers.

Nifty Bank fell below the 58,000 mark, with almost all major banking stocks trading lower. The Sensex and the Nifty came under heavy pressure with weakness in private banks.

Nor were banks the only ones selling. Financial services, FMCG, oil & gas and healthcare stocks also fell, while realty was one of the few sectors in the positive territory.

6. Growing Fear in the Market

Investor nervousness was also evident in the India VIX, often referred to as the market’s “fear index”.

The index rose 25.62% to 14.58, indicating that traders are anticipating larger market movements in the coming days.

A rising VIX doesn’t always mean markets will continue to fall, but it usually means that uncertainty has increased.

7. Global Markets Under Pressure

Indian markets also followed the overseas markets.

Most of Asia’s markets fell after Wall Street ended in the red overnight. Meanwhile, Dow futures suggested a sluggish start as investors were concerned about the situation in West Asia and waiting for the latest meeting minutes from the US Fed.

Indian stocks also come under pressure when global markets become risk-averse.

8. Rupee Falls Against Dollar

Meanwhile, the Indian rupee depreciated 20 paise to 95.16 against the dollar in opening trade.

Imports, especially of crude oil, become costly when the rupee is weak. This, coupled with higher oil prices, adds another layer of worry for investors and can put pressure on market sentiment.

For the time being, traders will be on the lookout for developments in West Asia, crude oil prices and the beginning of the June-quarter earnings season. Any improvement on these fronts would help calm markets, while new negative news could keep volatility elevated.

(Disclaimer: This article is for informational purposes only and should not be considered investment advice. The views, opinions, and recommendations expressed herein are those of the respective experts. Readers are advised to consult a qualified financial advisor before making any investment decisions.)

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