Indian Stock Market Suffers Sharpest Decline, Notching 900-Point Drop Amid ₹7 Lakh Crore Losses

Indian Stock Market Witnessed a Strong Selloff Amid Global Weakness

The Indian stock market experienced a significant downturn on Monday, 18 May, with both the Sensex and the Nifty 50 indices plummeting by over 1% each. The Sensex crashed more than 900 points, or over 1%, to an intraday low of 74,328, while the Nifty 50 tanked over 1% to the day's low of 23,358. The mid and small-cap indices on the BSE dropped up to 2%.

As a result of the sharp selloff, the overall market capitalisation of BSE-listed firms fell below ₹454 lakh crore from nearly ₹461 lakh crore in the previous session. This decline in market capitalisation translates to a loss of ₹7 lakh crore for investors in a single session.

Factors Contributing to the Selloff

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The recent escalation of tensions in the Middle East has had a significant impact on the global market sentiment. A targeted drone attack on the United Arab Emirates' (UAE) Barakah nuclear power plant on Sunday has heightened fears of fresh hostilities in the region. The ongoing ceasefire between the US and Iran remains uncertain, with both sides yet to settle their conflict despite diplomatic efforts.

The sharp increase in crude oil prices has stoked inflationary fears. Brent Crude, the international crude oil benchmark, jumped 2% to reclaim the $111 per barrel. Higher oil prices are a major negative for the Indian economy as they widen the country's trade deficit, weaken the rupee, drive inflation higher, strain government finances, and erode corporate profitability.

US President Donald Trump's warning to Iran to act quickly or face consequences has further added to the market volatility.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline