Rs 6 lakh crore wiped out as Sensex, Nifty slide 1% each; key factors behind today’s market crash

Benchmark equity indices opened sharply lower on Thursday, with the Sensex dropping over 1,250 points and the Nifty50 slipping below the 25,500 mark. The decline was in line with losses in other Asian markets as investors curbed their risk appetite amid the escalating Middle East conflict.

The BSE Sensex was trading 1,264 points, or 1.5%, lower at 83,002. The Nifty50 was down 344 points, or 1.33%, trading at 25,452 around 9:16 am.

The market capitalisation of all listed companies on BSE declined by Rs 5.63 lakh crore to Rs 469.23 lakh crore.

Concerns over a potential escalation in the Middle East grew after Iran launched ballistic missiles at Israel earlier in the week, fueling fears that oil supplies from the region could be disrupted if the conflict intensifies.

Oil prices ticked higher on the day. A rise in oil prices is a negative for importers of the commodity like India, as crude contributes significantly to the country’s import bill.

From the Sensex pack, Reliance Industries, HDFC Bank, ICICI Bank, M&M, L&T, and Bharti Airtel were the top contributors dragging the index down, while JSW Steel and Tata Steel were the only stocks that opened higher.The Nifty Oil & Gas index dropped over 1.2% in early trade, weighed down by concerns over the escalating Middle East conflict. Hindustan Petroleum, IOC, and GSPL were the top laggards on the index. Meanwhile, the fear gauge India VIX jumped 8.9% to 13.06.

Here are the key factors behind today’s meltdown

1) Iran-Israel Clash

Indian stocks declined on Thursday amid rising concerns over the escalating hostilities between Iran and Israel. Reports indicate that the Israeli military has confirmed the deaths of eight soldiers, including a team commander, during ground operations in southern Lebanon.

This escalation follows Iranian missile attacks targeting Tel Aviv, with Israel’s military chief warning of an imminent response.

2) Rise in crude oil prices

Oil prices increased amid concerns that escalating tensions in the Middle East could threaten supplies from major producers. Brent crude briefly surpassed $75 per barrel, while West Texas Intermediate topped $72, with both benchmarks rising nearly 5% over the past three days.

A rise in oil prices is a negative for importers of the commodity like India, as crude contributes significantly to the country’s import bill.

“The situation will change if Israel attacks any oil installations in Iran which will trigger a huge spike in crude. If it happens, it can turn out to be more damaging for oil importers like India. Therefore, investors should watch the emerging situation very closely,” said Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.