The Indian stock market witnessed an across-the-board selloff in intraday trade on Wednesday, 22 July, with the benchmark indices falling by almost 1% during the session, while the mid- and small-cap segments underperformed.
The Sensex crashed nearly 750 points, or 1%, to hit an intraday low of 76,722. The NSE counterpart, the Nifty 50, fell below its crucial support of 24,000, hitting an intraday low of 23,973.70, falling over 200 points, or nearly 1%.
The Nifty Midcap 100 and Smallcap 100 indices fell up to one-and-a-half per cent during the session.
Why is the stock market falling?
Here are five key factors behind the selloff in the Indian stock market:
1. Trump tariffs
Market sentiment was hit by new tariff threats. US President Donald Trump on Wednesday announced tariffs of 100% on all generic drugs imported into the United States from 1 August 2028, which will be raised to 200% from the next year.
“Effective August 1st, 2026, all Generic Drugs being brought into the United States will continue to have a TARIFF of ZERO PERCENT for a two-year period of time, after which the TARIFF will be raised to 100% for a one-year period of time, and 200% thereafter,” said Trump.
Besides, US Trade Representative Jamieson Greer said on Tuesday that new tariff measures targeting dozens of countries could be announced soon, as President Donald Trump’s temporary global tariff regime is set to expire later this week.
2. Widening US-Iran conflict
The ongoing US-Iran conflict is widening in the region, driving oil prices higher and increasing macroeconomic challenges for major oil importers like India.
As per media reports, Iran’s army launched a large drone attack on what it described as US ammunition storage and logistics facilities in Al-Dawha, Kuwait.
The US military launched an 11th night of strikes on Iran even as Trump said the US would soon target the area near Pickaxe Mountain – a site near one of Iran’s primary nuclear enrichment facilities.
Iran, on the other hand, has warned that a US attack on Pickaxe Mountain would widen the war and trigger broader strikes on Washington’s regional allies.
“The continuing U.S.-Iran conflict and rising Brent crude price will continue to weigh on markets despite positive news on other fronts,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
3. Oil prices now above $92 per barrel
Oil prices rose for the fourth consecutive session, raising risks of inflation flaring up and the resulting monetary tightening.
Crude oil benchmarks Brent crude rose to $92.67 a barrel, its highest since 11 June this year, driven by the US-Iran conflict and concerns of further energy supply disruptions.
4. Rupee weakens
The Indian rupee declined by 11 paise to 96.36 per dollar in early trade on Wednesday, amid elevated crude oil prices and escalating US-Iran tensions. Increased geopolitical risks have also driven demand for safe-haven assets such as the dollar.
Rising oil prices have fuelled concerns over India’s import bill and inflation outlook, while weak global sentiment has also weighed on the rupee.
Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, pointed out that the focus is now on the US Federal Reserve’s policy decision on 29 July, which is expected to provide the next major direction for the US dollar and emerging market currencies.
“Technically, the rupee is expected to trade in the 96–96.45 range in the near term,” said Trivedi.
5. Rising dollar, bond yields
The rising US dollar and bond yields have raised the risk of a further acceleration in foreign capital outflows from emerging markets like India. The dollar index is above 101, while the US 10-year bond yield has risen to 4.635% from 4.545% in just 4 sessions.
When the US dollar and bond yields rise, foreign investors tend to withdraw funds from emerging markets’ equities and invest in safer debt instruments back home.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. 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.
