Sensex Suffers 2,400-Point Loss in Three Days; Investors' Portfolios Dwindle by ₹7 Lakh Crore

Indian Stock Market Witnesses Third Consecutive Day of Decline

The Indian stock market continued its downward trajectory on Friday, 24 April, with the benchmark indices, Sensex and Nifty 50, experiencing a 1% decline each during the session. The 30-share pack plummeted by more than 800 points to an intraday low of 76,829, while the Nifty 50 fell by 1% to a day's low of 23,937.

The selloff led to a significant loss for investors, with the overall market capitalisation (m-cap) of BSE-listed firms dropping to ₹462 lakh crore during the session from ₹466 lakh crore in the previous session. In just three consecutive sessions, the Sensex has plunged more than 2,400 points, or 3%, while the NSE barometer Nifty 50 has crashed by 2.6%. Investors have become poorer by ₹7 lakh crore in three days, as the cumulative m-cap of BSE-listed firms stood at ₹469 lakh crore on 21 April.

Factors Driving the Selloff

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There are several key factors contributing to the strong selloff in the Indian stock market:

Uncertainty over a Potential US-Iran Peace Deal

The market is reeling under selling pressure due to the absence of clear signs that a peace deal between Washington and Tehran could be finalised soon. Despite a ceasefire, both countries have not shed their aggression against each other. The market has been continuously responding to bad news and hopes emanating from a potential deal on the West Asia conflict.

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

Oil Prices Jumps 18% this Week

Crude oil prices have been on a strong uptrend this week, rising almost 18% this week, as the second round of talks between the US and Iran did not take place, with neither side arriving for talks in Pakistan. Higher crude oil prices are not just an immediate headwind for the market. Experts say investors are worried about the second-order impact of oil price volatility, which may materialise as a hit to Q1FY27 earnings.

Rupee Below the 94 Mark

The Indian rupee has fallen below the 94-per-dollar mark once again, weighing on market sentiment. The Indian currency fell 24 paise to 94.25 against the US dollar in early trade on Friday, extending its downward streak to a fifth consecutive day.

Strong Foreign Capital Outflow

After buying Indian equities for a few days this month, foreign institutional investors (FIIs) have again started buying Indian stocks aggressively. Over the last four sessions, FIIs have sold Indian stocks worth over ₹8,300 crore in the cash segment. "FPIs have again turned sellers this week after buying for three days last week. This, along with the spike in crude, has again dragged the rupee below 94. If this trend of FPI selling continues, large caps will continue to be weak," said Vijayakumar.

Technical Factor

The Nifty has breached its key support at 24,000. Even though the market appears oversold, technical experts see the possibility of further downside. According to Shrikant Chouhan, the head of equity research at Kotak Securities, the 50-day SMA (simple moving average) or 24,300 would act as an immediate resistance zone. Below 24,300, the correction wave is likely to continue.