Stock Market Crash: What triggered the steep fall on the Sensex, Nifty on Wednesday

Indian equity markets are under pressure on Wednesday, with the Sensex and Nifty 50 declining over to 1.5% each, extending their losses for the second straight session. The losses come after a four-day winning streak, which ended on Tuesday.

As of 2:10 PM, the Nifty 50 is trading with losses of close to 500 points, while the Sensex is down close to 1,500 points. 45 out of the 50 Nifty constituents are trading with losses currently.

Before the fall on Tuesday, the Nifty 50 had made an intraday high of 24,530, which was an upmove of nearly 700 points from the June 30 close of 23,865.

Here are the possible factors why the markets are trading with losses:

Routine Profit Booking

After a near-700-point upmove since the start of July, the market participants could be looking to take some profits off the table, ahead of the start of the quarterly results season.

Technical Factors

Technical factors could also be attributed to the fall, as the 24,500 level appeared to be a key resistance zone for the Nifty. The index crossed that level on Tuesday, made a high of 24,530, but failed to sustain at or above those levels.

Going into Tuesday's session, which also happened to be the Nifty weekly expiry, the Nifty Put-Call Ratio had crossed levels of 1.3, which was indicating that the market was nearing overbought zones.

As per Tuesday's F&O data, the highest Open Interest was placed at the 24,500 strike Call, which has now moved lower to the 24,300 strike.

Flare Up in West Asia

After days of ceasefire, reports began to emerge of commercial vessels being attacked once again in the Strait of Hormuz during transit, which also prompted the US forces to launch retaliatory strikes on Iran.

US President Donald Trump has said that as per him, the MoU with Iran is over and that it was a waste of time dealing with Iran.

Following Trump's remarks, the Dow futures are down close to 400 points, while Crude oil prices have seen gains of over 4% to trade above the mark of $77 to a barrel.

Underperformance Of Nifty Bank

The Nifty Bank has been a major contributor to the Nifty managing to first cross the 24,000 mark and then head further higher. While the index took a break last week with IT leading the Nifty move higher, the index did well on Tuesday, but is again facing selling pressure at higher levels.

All but one stock on the Nifty Bank are trading with losses on Wednesday, with the index now trading below the 58,000 mark, heading back towards the lower end of the 57,500 - 58,500 range.

Thursday will be the weekly options expiry of the Sensex contracts, as well as the first full day of the current results season, with TCS, Anand Rathi Wealth and GM Breweries reporting numbers. Later tonight, markets in the US will be reacting to the minutes of the recent FOMC meet and of course, the developments surrounding West Asia.