The Indian stock market saw a sharp intraday selloff on Thursday, February 19, as investors booked profits across sectors after recent gains.
The Sensex crashed over 650 points, while the Nifty 50 dropped to an intraday low of 25,586 during the session.
The broad-based selloff impacted second-rung mid- and small-cap indices, as the BSE mid- and small-cap indices also dropped by more than half a per cent each.
Investors lost about ₹4 lakh crore as the overall market capitalisation of BSE-listed firms dropped to nearly ₹468 lakh crore during the day from ₹472 lakh crore in the previous session.
Why is the stock market falling? 5 key factors
Let’s take a look at five key factors that could be behind the stock market crash on Thursday:
1. Profit booking after recent gains
The domestic market is seeing some profit-taking after recent gains. On Wednesday, the Sensex and the Nifty 50 extended gains for the third consecutive session. With major macro triggers, including the Budget, India-US deal, and RBI policy, behind and the Q3 results season over, the market is witnessing stock-specific action amid a lack of fresh domestic triggers.
2. Fed’s mixed signals weigh on sentiment
The minutes of the US Fed’s January meeting showed that officials are divided on the path ahead. Some of them see scope for further easing if inflation cools, while others are ready to tighten policy should price pressures persist.
A prolonged pause on rate cuts or a US Fed rate hike may strengthen the US dollar, potentially impacting foreign capital inflows into Indian markets, which have seen FII inflows resume in February after seven consecutive months of selloffs in the cash segment.
3. Focus stays on US-Iran
A CNN report on Wednesday claimed that the US military is set to launch a strike on Iran as soon as this weekend. Axios reported that a US attack on Iran would likely be a “massive, weeks-long campaign” resembling full-scale war rather than a limited strike.
The market is closely observing developments surrounding the US-Iran relationship. Experts point out that market participants are taking money off the table, anticipating further escalation in US-Iran tensions over the weekend.
(This is a developing story. Please check back for fresh updates.)
