Stock Market Sell-Off: Key triggers behind the fall that wiped off ₹8 lakh crore in market cap

Indian equity markets have sold off sharply on Thursday, with the Nifty 50 index slipping below the key 20-DMA levels above 26,000, something that the bulls had managed to defend despite three days of losses.

Not just the Nifty, even the broader markets have witnessed selling pressure on Thursday. All sectoral indices trade with losses, led by Metal stocks, while the outperforming Nifty Bank has also seen selling pressure today.

Courtesy of this fall, investor wealth worth over ₹8 lakh crore has been wiped out so far in today's session.

Here are some of the key triggers that led to Thursday's fall:

Technical Factors

The Nifty had been consistently defending the 20-DMA level on the upside at 26,000, despite grinding lower for the entire week so far. However, it broke below those levels on Thursday, triggering further selling pressure, as put writers on those levels were caught on the wrong side.

Sudeep Shah of SBI Securities said that 26,050 - 26,110 now becomes a key hurdle for the index and unless the index does not close above those levels for two to three sessions, the trend of the market may take the index back down to 25,650 - 25,700 levels, which is the lower end of the trading range.

No Clarity On Trade Deal

Nine months into Donald Trump's Liberation Day announcements, there is still no clarity over whether a trade deal between India and the US is in the offing.

The lack of clarity is despite both Prime Minister Narendra Modi and US President Donald Trump highlighting the good relations shared by both leaders and the countries.

This uncertainty triggered a sharp sell-off in export-oriented names such as Gokaldas Exports, shrimp feed exporters such as Avanti Feeds and peers, along with other export-oriented stocks. Most of these textile and shrimp players get around 50% to 70% of their revenue from the US market.

Tariff Threat

Senator Lindsey Graham from South Carolina, said that Donald Trump had given the green light to the Russia Sanctions bill, which gives him the authority to impose tariffs of up to 500% on countries continue to purchase Russian oil.

"This bill would give President Trump tremendous leverage against countries like China, India and Brazil to incentivize them to stop buying the cheap Russian oil that provides the financing for Putin’s bloodbath against Ukraine," Graham wrote on his social media handle on "X."

Heavyweights Underperform

The Nifty 50 heavyweights, Reliance Industries, HDFC Bank, TCS, have been contributing to the selling on one or the other day this week, which first kept the Nifty recovery in check from Monday to Wednesday, and are now among the top contributors today to the Nifty fall. Reliance, Infosys and TCS are together contributing nearly 90 points to the Nifty fall.