The Indian stock market witnessed a strong across-the-board selloff in morning trade on Monday, March 30, with the Sensex and the Nifty 50 crashing over 1% each.
The Sensex crashed 1,200 points, or 1.6%, to an intraday low of 72,392, while the Nifty 50 plunged 350 points, or 1.5%, to the day’s low of 22,470. The midcap and smallcap indices on the BSE also declined by more than 1% during the session.
Investors lost about ₹5 lakh crore within minutes as the overall market capitalisation of BSE-listed firms fell to ₹417 lakh crore, down from ₹422 lakh crore in the previous session.
Why is the Indian stock market falling?
Here are the key factors behind the stock market crash today:
1. The US-Iran war
The US–Iran war, which began on February 28, has now extended beyond a month, with conflicting signals about whether it will end in the near future.
US President Donald Trump extended the pause on strikes against Iran’s energy infrastructure last week. However, there has been little progress towards a complete resolution to the conflict.
As media reports suggest, the Trump administration sent a 15-point ceasefire plan to Iran. However, no formal talks have taken place so far, even though the two sides have been communicating through back channels and intermediaries, including Pakistan’s efforts to act as a mediator.
Meanwhile, Yemen-based Houthis, who are supported by Iran, have joined the West Asian war and said that they would continue the operations until US-Israeli attacks on Iran and its proxy militant groups, including Hezbollah in Lebanon, cease, according to Bloomberg.
“With the conflict in West Asia entering the fifth week, there are signs of escalation of the war with the Houthis joining the conflict and the US sending additional troops to reinforce the attack,” VK Vijayakumar, Chief Investment Strategist, Geojit Investments, noted.
2. Crude oil prices jump
Brent Crude prices surged further, trading above the $115 per barrel mark as uncertainties over the US-Iran war persist. The Strait of Hormuz, through which around 20% of global crude oil and LNG pass, is still effectively closed to most shipping.
Concerns are rising that elevated crude oil prices will damage India’s macroeconomic outlook, as the country is the world’s third-largest importer of crude oil. It meets about 85-90% of its oil requirements through imports.
“Brent crude has again shot up to $116. The Goldilocks macro scenario that India had before the war has almost disappeared due to the war. Instead of high GDP growth, low inflation, moderate fiscal and current account deficits and expectations of higher corporate earnings growth in FY27, now we face prospects of lower GDP growth, higher inflation, higher fiscal and current account deficits and lower earnings growth for FY27,” Vijayakumar noted.
3. India VIX tops 28 mark
The volatility index, India VIX, jumped 6% to surpass 28, indicating fragile market sentiment.
According to market experts, the normal range for the volatility index is 12 to 15. A level above 15 indicates the market is discounting high volatility over the next 30 days.
A jump in India VIX above 28 reflects increasing nervousness in the Indian stock market amid indications that the US-Iran war could persist, potentially disrupting energy supplies, triggering global inflationary pressures, and puncturing global growth momentum.
4. Relentless FPI selloff
Foreign portfolio investors (FPIs) have been relentlessly selling Indian stocks amid the raging war in West Asia.
According to NSDL data, FPIs have pulled out ₹1,23,025 crore from the Indian financial market in March till the 27th.
FPIs’ equity assets fell by $79 billion to $710 billion in the fortnight ended 15 March— the steepest fortnightly decline in at least six years, even exceeding the COVID-19 pandemic-triggered selloff.
5. Monthly F&O expiry
The March series of futures and options (F&O) contracts is ending on Monday, March 30, as Tuesday, March 31, is a stock market holiday on account of Shri Mahavir Jayanti.
“Expiry of March derivatives contracts is likely to keep volatility elevated,” Ajit Mishra, SVP- Research at Religare Broking.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
