Stock market crash: The Indian stock market resumed its downward trend on Monday (March 23), with the equity benchmarks—the Sensex and the Nifty 50— plunging more than 2% each.
The Sensex tanked 1,837 points, or 2.46%, to end at 72,696, while the Nifty 50 slumped 602 points, or 2.6%, to 22,512. The BSE 150 Midcap and the BSE 250 Smallcap indices crashed 4% each.
Investors lost about ₹14 lakh crore in a single session as the overall market capitalisation of BSE-listed firms dropped to ₹415 lakh crore from ₹429 lakh crore on Friday.
What drove the Indian stock market down today?
After Friday’s decent gains, the domestic stock market witnessed intense selling pressure. Let’s take a look at the five key factors behind the stock market crash today:
1. Intensifying US-Iran war
Middle East tensions have been ratcheting up, contrary to expectations of an imminent easing.
US President Donald Trump on Saturday threatened to “obliterate” Iran’s energy infrastructure if the West Asian failed to open up the Strait of Hormuz within 48 hours.
Meanwhile, Tehran has warned that the Strait of Hormuz will be “completely closed” if the US follows through on threats to target its power plants.
A Reuters report quoted Israeli military chief Eyal Zamir saying that Iran launched two ballistic missiles with a range of 2,500 miles at the U.S.-British military base at Diego Garcia in the Indian Ocean.
Track all US-Israel-Iran war live updates here
2. Rupee plummets to a fresh record low
According to Bloomberg data, the Indian rupee fell 26 paise to close at 93.97 on Monday, amid concerns that energy prices could spike further amid escalating tensions in the Middle East.
Since the beginning of the US-Iran war, the domestic currency has declined by nearly 3% amid rising oil prices.
Rupee’s weakness is significantly negative for the stock market, as it can potentially further aggravate foreign capital outflows. Moreover, it raises inflationary pressures, which can lead to higher interest rates and a cascading effect on corporate earnings and the broader economy.
3. Crude shock turns into a major worry
With the Middle East war dragging on and intensifying, concerns about its impact on India’s macroeconomic outlook have started to surface. Brent crude has stayed above the $110-per-barrel mark, raising fears that India’s current account deficit may widen and dent its fiscal strength.
As brokerage firm Motilal Oswal Financial Services explains, “With 80% energy import dependence, higher crude prices directly impact the growth, current account deficit (CAD), inflation, the rupee, and fiscal balances. The overall macro effect will depend on the pass-through to consumers and government interventions through duties, subsidies, and fuel price controls.”
“A $10 per barrel increase in crude could shave 30–40 basis points off GDP growth. While the base case assumes 7.5% growth in FY27 at $70 per barrel, sustained prices above $90 per barrel could push growth below 7%, as energy-intensive sectors face margin pressure and weaker demand,” said Motilal.
4. FPI selloff
Amid rising crude oil prices and falling Indian rupee, foreign portfolio investors (FPIs) have sold Indian stocks worth over ₹1 lakh crore since the US-Iran-Israel war started.
According to NSDL data, FPIs have taken away ₹1,03,967 crore from the Indian financial markets in March till the 20th.
“The war in West Asia has aggravated the selling by FPIs. The volume and intensity of FPI selling increased in recent days when the conflict escalated. The weakness in global equity markets following the war in West Asia, the steady depreciation of the rupee and concerns surrounding the impact of high crude prices on India’s growth and corporate earnings contributed to the concern of FPIs,” VK Vijayakumar, Chief Investment Strategist, Geojit Investments, noted.
5. Sharp global selloff
Major Asian markets, including Japan’s Nikkei and Korea’s Kospi, crashed by up to 6%, reflecting heightened global market worries over the US-Iran war. Major European markets fell up to 2%
Market participants fear that a prolonged war in West Asia will drive global inflation higher due to rising energy prices, leading to tighter monetary policies and slowing global economic growth.
“Global cues remain decisively weak, reflecting intense risk aversion and panic selling across global equities. This reinforces the negative setup for Indian equities and suggests that volatility will remain elevated throughout the session,” said Ponmudi R, CEO of Enrich Money.
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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.