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The Sensex and Nifty50, opened in the red on Monday, mirroring weakness in Asian markets; Key factors behind the market crash
Indian benchmark indices slumped sharply in early trade on Monday
Indian benchmark indices Sensex and Nifty50 ended lower on Monday, weighed down by heightened geopolitical tensions after reports of US airstrikes on Iranian nuclear facilities. The development raised concerns over a potential escalation in the Middle East, pushing crude oil prices to a five-month high and denting investor sentiment.
The BSE Sensex closed 511 points, or 0.62%, lower at 81,896, while the NSE Nifty slipped 140 points, or 0.56%, to settle at 24,972.
In early trade, the total market capitalisation of all BSE-listed companies fell by nearly Rs 2 lakh crore, standing at Rs 44.75 lakh crore.
On the sectoral front, Nifty IT declined over 1% as investor concerns grew over prolonged weakness in global tech spending, following Accenture’s third consecutive year-on-year drop in outsourcing orders. Other sectors including Nifty Bank, Financial Services, Auto, FMCG, and Consumer Durables also saw declines between 0.5% and 1%.
Why Is the Indian Stock Market Falling Today?
US Strikes on Iran Escalate Israel-Iran Conflict
Renewed geopolitical tensions have rattled market sentiment, as hopes for a quick resolution to the Israel-Iran conflict were dashed over the weekend. The United States launched surprise airstrikes on three Iranian nuclear facilities on Saturday, escalating the situation in West Asia.
Market experts say the focus now shifts to how Iran responds. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted, “While the US bombing has intensified the crisis, the market’s reaction will depend on Iran’s next move. If Iran retaliates by targeting US military assets or personnel, the crisis could deepen further.”
Threat to Strait of Hormuz Sparks Supply Fears
Iran’s Supreme National Security Council is reportedly considering closing the Strait of Hormuz, a vital chokepoint for global energy supplies. According to Bloomberg, nearly 20% of the world’s oil trade flows through this narrow passage daily.
Any disruption in the Strait would significantly impact crude oil supplies, driving up global oil prices. For major importers like India, this could translate into higher inflation, fiscal pressure, and a deeper market selloff.
IT Stocks Slide After Accenture Sell-Off
The Nifty IT index declined over 1% in early trade on Monday, dragged down by heavyweights like Infosys, HCL Tech, TCS, and OFSS. The slide followed a 7% drop in Accenture shares on Friday in U.S. markets, despite the global tech major beating revenue expectations for Q3 with $17.7 billion, above estimates of $17.3 billion.
While enterprise demand for AI-driven services supported growth, investor concerns focused on declining margins and a muted outlook across core verticals. Adding to the unease, Accenture flagged a slowdown in US federal contracts amid spending cuts under the Trump administration.
Rising Oil Prices May Delay Fed Rate Cuts
Crude oil’s renewed surge has reignited inflation worries, potentially delaying interest rate cuts by the U.S. Federal Reserve. Although Fed Governor Christopher Waller has backed early easing, markets now see little chance of a rate cut at the July 30 FOMC meeting. A September move is seen as more plausible.
All eyes will be on Fed Chair Jerome Powell’s testimony this week, along with speeches from 15 other Fed officials. With persistent inflation risks and geopolitical uncertainty, any delay in the Fed’s pivot could dampen foreign investor flows into emerging markets, including India.
Global Market Weakness Adds to Pressure
Indian equities tracked global cues lower, as investor sentiment remained cautious due to fears of Iranian retaliation following US airstrikes. MSCI’s broadest Asia-Pacific index outside Japan slid 1%, while Japan’s Nikkei dropped 0.6% despite signs of improving factory activity.
In Europe, futures pointed to a subdued start—EUROSTOXX 50 futures were down 0.4%, FTSE 100 futures fell 0.3%, and Germany’s DAX slipped 0.5%. Analysts warned that energy-importing economies like Japan and the EU are particularly vulnerable to oil price shocks, unlike the US, which is a net exporter.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
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