Indian stock market experiences crash: index decline and significant losses in stocks

The stock market is once again experiencing a significant decline. On Tuesday, both the Sensex and Nifty indices saw a sharp drop immediately after trading began. The Sensex index, comprising 30 shares from the Bombay Stock Exchange (BSE), started poorly and quickly lost over 400 points. Simultaneously, the Nifty-50 index of the National Stock Exchange (NSE) followed suit, falling by approximately 100 points.

Among the 30 major companies in the BSE Largecap segment, 26 showed a decrease in quotations. Analysts have established a direct link between the stock market decline and the tensions in the Middle East.

At the start of trading, the BSE Sensex opened at 75,970, which was lower than the previous day's closing figure of 76,132. It soon continued to fall, losing 418 points to reach 75,714. Similarly, the NSE Nifty index also showed a decline at the open. This index of 50 stocks started at 23,743 compared to the previous close of 23,779, and then the rate of decline accelerated. By the time of writing, Nifty was trading at 23,668.

Among the stocks that fell the hardest amid the general market downturn, the following can be highlighted: in the BSE Largecap category were M&M Share (down 1.40%), Bharti Airtel Share (down 1.10%), and ICICI Bank-Axis Bank, which decreased by about 1%. In the Midcap segment, the largest drop was recorded by Voltas Share (2.50%) and TI India Share (1.50%), while Godrej Properties Share (1%) also saw a decline. Among Smallcap stocks, the most noticeable drops were seen in Amber Share (1.60%), Cyient Share (1.45%), and Angel One Share (1.40%).

The main reason cited for the stock market decline on Tuesday was the tensions in the Middle East, statements from Iran and Donald Trump, as well as the subsequent rise in crude oil prices in international markets. Iran increased gas prices for its consumers, while heightened tensions in West Asia have caused the price of Brent Crude to exceed the $97 mark, increasing inflation risk. The price of WTI Crude also exceeded $93, and the cost of Murban Crude trades around $107 per barrel.

The start of Wednesday proved extremely unfavorable for investors. As soon as trading began, both indices, Sensex and Nifty, experienced a sharp decline. The drop was provoked by renewed tensions between the United States and Iran.

The Sensex index, which comprises 30 stocks from the Bombay Stock Exchange, lost over 700 points. Simultaneously, the Nifty index of the National Stock Exchange also showed a significant decrease, exceeding 250 points immediately after the opening of trading.

The situation intensified against the backdrop of Donald Trump adopting a military stance and declaring control over the Strait of Hormuz. Furthermore, intensive attacks on Iran began from the US side.

At the start of trading on Wednesday, the BSE Sensex began its downward movement, falling from the previous close of 76,944 to 76,471, and then rapidly collapsed to 76,135. The NSE Nifty followed the steps of the Sensex, also experiencing a sharp decline since the opening. This index, which includes 50 stocks, opened in negative territory at 23,858 compared to the previous close of 24,055 and soon continued to fall to 23,786.

Last week, the stock market experienced significant turbulence, with the Sensex and Nifty indices showing an overall decline over five trading days. In the coming week, several factors related to both America and India will be decisive in determining the direction of the market. In addition to the release of important statistical data that may affect investor sentiment, attention will be focused on buying and selling activities by foreign investors.

The first determining factor is the GDP data for the first quarter. According to PTI, the next week will be particularly important for the Indian stock market as key indicators from the US and India are expected, capable of changing the market's trajectory. Specifically, India's Q1 2027 fiscal year GDP data will be presented on the last day of the month, August 31. This data could directly impact the market amid concerns about global supply chains and the continuous rise in energy prices.

The second factor influencing market dynamics is related to the US economy. US employment data for August will be published next week, September 4, and investors will closely monitor it. These reports will allow for assumptions regarding the Federal Reserve's interest rate strategy. As Ajit Mishra, SVP Research at Reliance Broking, noted, US employment data will affect not only the US dollar and American yields but may also impact emerging markets such as India.

The third factor is the buy and sell operations by FPI. Foreign investors' purchases and sales in the Indian stock market directly influence the Sensex and Nifty, and FPI investments or sell-offs next week could change the market's course. It should be noted that in August, FPI maintained confidence in the Indian market for the second consecutive month. According to depository data, approximately 31 thousand crore rupees were invested this month so far.

In addition to these three main factors, changes in crude oil prices on the international market may also affect the Indian stock market. There has been a sharp drop in crude oil prices in recent days: Brent Crude Oil is trading at $88 per barrel, while WTI Crude Price has fallen to $83 per barrel.