Why Is Stock Market Falling Today: The Indian stock market resumed its downward trend on Monday (March 23), with the equity benchmarks—the Sensex and the Nifty 50— plunging as much as 2% each in early
deals.
The Sensex plunged over 1,550 points, or over 2%, to 72,977, while the Nifty 50 plunged nearly 500 points, or over 2%, to 22,634.
The BSE 150 Midcap and the BSE 250 Smallcap indices crashed more than 2% each.
Investors’ wealth was eroded by about Rs 8 lakh crore within minutes as the overall market capitalisation of BSE-listed firms dropped to Rs 421 lakh crore from Rs 429 lakh crore on Friday.
Why is the Indian stock market falling today?
After Friday’s gains, Indian equity markets are under sharp selling pressure. Here are the key reasons behind today’s decline:
1. Escalating US-Iran conflict
Geopolitical tensions in the Middle East have intensified instead of easing, rattling global markets.
US President Donald Trump on Saturday warned of “obliterating” Iran’s energy infrastructure if Tehran does not reopen the Strait of Hormuz within 48 hours. In response, Iran has threatened a complete closure of the crucial oil transit route if such actions are carried out.
Adding to concerns, a Reuters report cited Israeli military chief Eyal Zamir as saying that Iran launched two long-range ballistic missiles targeting the US-UK military base at Diego Garcia in the Indian Ocean, further escalating fears of a wider conflict.
2. Elevated crude prices
Oil prices remained firm on Monday, hovering above the $110 mark, as markets weighed escalating threats from the US and Iran to target energy infrastructure against the potential return of Iranian oil supplies after a temporary easing of US sanctions.
Brent crude, trading near $113 per barrel, poses a significant challenge for India, one of the world’s largest oil importers. Sustained high oil prices can stoke inflation, widen the current account deficit, weaken the rupee, and trigger foreign capital outflows.
Brent futures were at $112.18 per barrel, nearly flat, after hitting their highest level since July 2022 in the previous session. Meanwhile, US West Texas Intermediate (WTI) crude traded at $98.75 per barrel, up 52 cents. The Brent-WTI spread has widened to over $13 per barrel, the highest in years.
The severity of the crisis was underscored by International Energy Agency (IEA) Executive Director Fatih Birol, who described the situation as “very severe,” even worse than the combined oil shocks of the 1970s.
4. Persistent FPI selling
Foreign portfolio investor (FPI) outflows have intensified amid rising geopolitical tensions. FPIs have remained net sellers throughout March, with total outflows via exchanges reaching Rs 90,152 crore as of March 20.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said weak global cues, rupee depreciation, and concerns over high crude prices impacting growth and earnings have weighed on investor sentiment. He also noted that relatively lower returns from Indian markets over the past 18 months have contributed to sustained outflows.
5. Volatility spikes
Market volatility surged, with India VIX—the fear gauge—rising nearly 10% to 25.03, indicating heightened uncertainty and risk aversion among investors.
6. Weak global cues
Global markets remained under pressure, with Asian indices falling around 3.1% as escalating tensions in West Asia dampened hopes of a near-term de-escalation in the ongoing US-Israel-Iran conflict, now entering its fourth week.
