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Stock market crash: 5 reasons why Sensex tanked by over 1,000 points
Stock market crash: The Bombay Stock Exchange (BSE) benchmark index Sensex tanked by 1,048.90 points to close at 76,330
It was a bloodbath on Dalal Street on Monday as the Bombay Stock Exchange (BSE) benchmark index Sensex tanked by 1,048.90 points to close at 76,330. The Nifty dropped 345.55 points, finishing at 23,085.95.
The Sensex had declined 241.30 points or 0.31 per cent to settle at 77,378.91 on Friday.
TCS, IndusInd Bank, Axis Bank, and Hindustan Unilever emerged as the top performers. On the losing side, Adani Enterprises, Trent, BPCL, BEL, and Power Grid recorded steep losses.
ALSO READ: Retail inflation eases to four-month low of 5.22%
Here are the 5 reasons why the stock market crashed:-
1. According to an ANI report, the sharp decline at the stock market was attributed to “unfavourable” global cues. Vinod Nair, Head of Research at Geojit Financial Services, told ANI that global markets witnessed a significant sell-off, resulting in a similar response in domestic markets due to strong US payroll data suggesting fewer rate cuts in 2025.
“This has strengthened the dollar, driven up bond yields, and made emerging markets less attractive. Recent GDP downgrades and slowing earnings amidst higher valuations are weighing heavily on market sentiment,” he told ANI.
2. FII offloaded equities worth ₹2,254.68 crore as per the exchange data. Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, told PTI,"US imposing sanctions on Russian oil exports pushed the rupee to a fresh low against the dollar, which in turn triggered massive correction in domestic equity markets as overseas investors continued to desert the local share market. Wide-spread selling across the sectors fuelled along with massive exits in mid and smallcap stocks further worsened the sentiment."
3. On Monday, the rupee logged its steepest single-day fall in nearly two years and ended the session 58 paise down at its historic low of 86.62 (provisional) against the US dollar.
According to analysts, the Reserve Bank of India has allowed the fall in rupee's exchange rate versus US dollar amid dwindling forex reserves and declining emerging market currencies.
"RBI will allow the weakness as demand keeps moving up and supplies dwindle," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, told PTI.
4. Brent crude rose above $80 a barrel to its highest in more than four months, driven by wider U.S. sanctions on Russian oil and the expected effects on exports to top buyers India and China.
"Rising crude oil prices would raise concerns of a spike in domestic inflation, which could further delay any rate cut hopes from the RBI in the near to medium term," Tapse told PTI.
5. Union finance minister Nirmala Sitharaman will present the Union Budget 2025 on February 1."After a populist budget last year, we do not expect a very hefty pre-budget rally this year. Since the last budget was a populist budget after the BJP regained power for the third time in general elections conducted last year, we expect the Union Budget 2025 to bring a little break for the middle class comparatively, considering the low level of consumption trends this year, especially the rural demand, Divam Sharma, co-founder and fund manager at Green Portfolio, told HT's business website Mint.
