Sensex crashes 1,700 points: Why is the stock market down today?

The Sensex plunged nearly 1,700 points to 75,010.66, while the Nifty fell 2.23% to 23,248.60, as rising crude prices and escalating Middle East tensions triggered a broad-based risk-off sentiment across sectors.

In Short

• Dalal Street opened sharply lower amid geopolitical tensions and rising crude oil prices
• Sensex and Nifty crash over 2% after gaining strongly this week
• Banking and energy stocks led declines; HDFC Bank down nearly 5%

Dalal Street opened sharply lower on Thursday, with benchmark indices witnessing heavy selling in early trade amid escalating geopolitical tensions and a spike in crude oil prices.

The Sensex plunged nearly 1,700 points to 75,010.66, while the Nifty fell 2.23% to 23,248.60, as rising crude prices and escalating Middle East tensions triggered a broad-based risk-off sentiment across sectors.

OIL SHOCK, GLOBAL TENSIONS WEIGH

The sell-off comes in the wake of a sharp escalation in the Middle East after Israel struck a key LNG facility in Iran, sending Brent crude soaring past the $111 per barrel mark.

The surge in oil prices has triggered fresh concerns for India, a major oil importer, as higher crude costs threaten to fuel inflation, weaken the rupee and strain the country’s macroeconomic stability.

BANKS DRAG MARKETS LOWER

Market participants reacted swiftly, with banking heavyweights leading the decline.

HDFC Bank fell nearly 5% from its previous close, while Axis Bank and State Bank of India also traded lower. ICICI Bank saw a more contained decline but remained under pressure. The weakness in financial stocks weighed heavily on the indices given their significant weightage.

HDFC Bank was in focus after part-time chairman Atanu Chakraborty resigned, citing differences over “values and ethics” and concerns around certain internal practices, adding to stock-specific pressure on the lender.

Reliance Industries, another index heavyweight, declined in early trade, reflecting concerns around energy volatility and broader market sentiment. IT stocks such as Infosys, TCS and Wipro also traded in the red, tracking global cues and the lack of positive triggers from the US Federal Reserve.

Among sectoral losers, Larsen and Toubro dropped over 3%, while Bajaj Finance, Shriram Finance and UltraTech Cement also saw notable declines. Aviation stock IndiGo fell sharply as rising fuel costs threaten to squeeze margins, highlighting the immediate impact of elevated crude prices on oil-sensitive sectors.

Heavyweights bore the brunt of the decline. HDFC Bank dropped 40.10 points to 802.95, down 4.76%. ICICI Bank fell 1.61% to 1,268.50, while Axis Bank declined 2.88% to 1,217.10. State Bank of India slipped 1.93% to 1,049.10.

Among other key stocks, Larsen and Toubro fell 3.23% to 3,491.20, Bajaj Finance declined 2.17% to 861.00, and UltraTech Cement dropped 2% to 11,022.00. Infosys was down 1.78% at 1,244.50, while TCS slipped 1.25% to 2,410.30. IndiGo declined 2.56% to 4,248.80.

The selling was not limited to a few sectors, indicating a broader shift in sentiment. Even defensive names such as ITC and Hindustan Unilever traded lower, though declines were relatively modest. Coal India was among the few stocks trading in positive territory, benefiting from the rise in energy prices.

MARKETS MAY STAY VOLATILE

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the uncertainty around the conflict has intensified following Israel’s strike on a major LNG facility in Iran, pushing Brent crude to $111 per barrel.

“This is bad news for oil and gas importers like India. If Brent remains above $110 for an extended period, it will have negative implications for India’s macroeconomic indicators, including GDP growth and corporate earnings,” he said.

He added that markets are likely to remain volatile in response to developments on the war front and movements in crude prices, and the recent three-day recovery could be wiped out if tensions escalate further.

However, Vijayakumar noted that a prolonged conflict may not be in the interest of any party, and a sudden de-escalation leading to a sharp fall in crude prices cannot be ruled out.

Global cues added to the cautious sentiment. The US Federal Reserve kept interest rates unchanged but maintained a mildly hawkish stance, signalling limited room for rate cuts in the near term.

This has kept global liquidity tight and reduced the attractiveness of emerging markets like India for foreign investors.

Fund manager Nachiketa Sawrikar said rising inflation pressures and signs of a softening labour market in the US complicate the outlook for monetary easing.

Elevated oil prices, combined with a strong dollar, are already exerting pressure on emerging markets, including India.

Foreign institutional investors are believed to be trimming positions amid the uncertainty, leading to sharp early declines in Indian equities. The recent rally in domestic markets, which lasted for three sessions, appears to have been fragile and sentiment-driven, with Thursday’s fall wiping out those gains.

Going ahead, the trajectory of crude oil prices and developments in the Middle East will remain key triggers for the market.

A prolonged conflict could keep volatility elevated, while any signs of easing tensions may provide relief and trigger a rebound. For now, caution has returned to Dalal Street as investors reassess risks in an increasingly uncertain global environment.

- Ends