Tuesday proved to be an unsuccessful day for investors in the stock market. Despite a strong start for the Sensex and Nifty indices, the market suddenly experienced a sharp decline, leading to a collapse of both indices.
The Sensex, which comprises 30 stocks from the Bombay Stock Exchange (BSE), sharply fell by more than 1300 points from its daily high. Meanwhile, the Nifty index of the National Stock Exchange (NSE) lost 440 points from its daily high.
Trading began on Tuesday with strong growth, giving investors hope that the downturn observed last week might be interrupted. However, this optimism was short-lived as the subsequent decline intensified as trading progressed.
By the time of writing, the BSE Sensex was trading at 74,087, showing a drop of about 700 points, which represented a collapse of 1349 points from the daily high. The NSE Nifty, which started trading at 23,576 compared to the previous close of 23,398, also began to fall following the Sensex and reached 23,152 by the time of publication, losing 440 points from its daily high.
The decline in the stock market is attributed to several factors. Among them are the sharp rise in crude oil prices and the influence of US Treasury bond yields.
The first reason is related to tensions between the US and Iran in the Middle East, as well as escalating conflicts in West Asia, which jeopardizes global energy supply. This is reflected in oil prices: the price of Brent Crude on the international market is trading above $107 per barrel, increasing the risk of inflation and worsening sentiment in stock markets.
The second reason relates to the US. On Monday, the yield on 10-year American bonds reached 5%, marking the first instance since October 2023. Since the 10-year bond is considered a global benchmark and reflects the state of the American economy, it influenced the Indian market on Tuesday, especially after a significant drop in the American stock market the previous day.
The third factor is the sharp jump in the India VIX index, which serves as a measure of fear in the stock market. Amid global tension and rising oil prices, this index jumped to approximately 13, exceeding the 6% mark, signaling a possible increase in market selling in the near future. Furthermore, a significant decline was recorded across most categories, except for the IT index.
Among the stocks that suffered the most during the stock market crash, BEL Share (down 5%), IndiGo Share (down 3.56%), Bajaj Finserv Share (down 2.96%), Adani Ports Share (down 2.50%), SBI Share (down 2.42%), Titan Share (down 2.35%), Bajaj Finance Share (down 2.34%), Asian Paints Share (down 2.31%), M&M Share (down 2.19%), and Trent Share (down 2%) can be highlighted.