Stock market crash: Equity benchmark indices, Nifty50 and BSE Sensex, have plunged by over 2% in the last few trading sessions, with both indices seeing the fifth consecutive day of crash on Friday. Concerns over global trade tensions and political developments in Washington have disrupted investor sentiment, adding to caution.Over the past five trading sessions, the BSE Sensex has shed over 2,100 points, falling from its January 2 close of 85,762.01 to an intraday trough of 83,402.28 on Friday. During the same period, the NSE Nifty 50 has declined to levels below 25,700. Nifty50 ended the day at 25,683.30, down 194 points or 0.75%. BSE Sensex closed at 83,576.24, down 605 points or 0.72%.
Why is the stock market crashing?
1. FIIs sell-off: Ongoing foreign investor outflows have added to the pressure on equities during the prolonged slide. Foreign institutional investors sold shares worth Rs 3,367.12 crore on Thursday, January 8, marking the fourth straight session of net selling following a brief respite on January 2.The steady exit of overseas funds has intensified the weakness in benchmark indices, deepening losses amid an uncertain global backdrop and reinforcing a risk-averse stance among investors already navigating unfavourable external conditions.2. Trump trade & tariff uncertainty: Equity markets have remained under strain after US President Donald Trump indicated that tariffs on Indian exports could be increased over New Delhi’s continued purchases of Russian crude. A new bill proposing 500% tariffs on countries buying Russian oil has been given a nod by Trump.A proposed bilateral trade agreement between the two countries remains unresolved despite six rounds of discussions held since March. Speaking on the All-In Podcast, US Commerce Secretary Howard Lutnick suggested the talks lost momentum after Prime Minister Narendra Modi did not place a call to Trump. The Trump administration has already imposed tariffs of up to 50% on Indian goods, including a 25% levy linked to India’s imports of Russian oil, among the steepest applied to any trading partner. India has termed these measures “unfair, unjustified and unreasonable”.The uncertainty has intensified ahead of a pending ruling by the US Supreme Court on the legality of Trump’s tariff actions. If the court finds the levies unlawful, Washington could be required to return close to $150 billion to importers, a decision that would have far-reaching implications for global trade.“After the sharp correction yesterday triggered by the possibility of about 500% tariff on India under the provisions of the Russia Sanctioning Act approved by President Trump, the market will be focused on the verdict expected today from the US Supreme Court on the legality of Trump tariffs,” said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments.“There is a high probability of the verdict going against Trump. But the details are significant: that is, whether it would be a partial striking down of the tariffs or completely declaring the tariffs illegal. The market reaction would depend on the details. If the Supreme Court declares Trump tariffs illegal, there would be a rally in India since India has been the worst affected by the 50% tariffs,” Vijayakumar added.He noted that the recent sharp selloff has dragged down even stocks unlikely to be directly affected by any punitive US measures. According to him, sectors such as financials, consumer discretionary and industrials, which have corrected due to broader market weakness, now offer opportunities for long-term investors to accumulate.3. Muted global signals: Soft cues from overseas markets have reinforced the cautious mood in Indian equities. Stocks across Asia slipped as investors awaited a key US employment report and prepared for a US Supreme Court decision on the validity of President Donald Trump’s broad tariff measures, a ruling that could once again unsettle global markets.4. Rising crude prices weigh on sentiment: Firming oil prices have added another layer of pressure on Indian markets, given the country’s significant reliance on imported crude. Prices moved higher amid lingering geopolitical risks, with investors closely monitoring developments in Venezuela following the capture of President Nicolás Maduro by US forces in a high-profile military operation in Caracas over the weekend.5. Technical signals point to continued weakness: Chart indicators have strengthened the bearish undertone, with key benchmarks breaking below important support levels during the recent decline.“Technically, the market breached the 20-day SMA (Simple Moving Average) support zone, and post-breakdown, selling pressure intensified,” said Shrikant Chouhan, Head Equity Research at Kotak Securities according to an ET report.“On daily charts, it has formed a long bearish candle, indicating further weakness from the current levels,” Chouhan said. He added that “We are of the view that as long as the market is trading below 26,000/84500, weak sentiment is likely to continue on the downside, and the market could slip till 25,750-25,700/84000-83700. On the flip side, if it moves above 26,000/84500, the pullback could continue till 26,075-26,100/84800-85000.”Geojit Investments also flagged caution, citing stretched technical readings. “Short term oscillators being oversold, and being in the vicinity of 30 December’s low, it will not be surprising if a turn high is attempted, as long as 25878 is not penetrated by much margin,” the brokerage said.“Alternatively, slippage past 25776 would have to be taken as a sign that Nifty is coming off a sideways trading range that has been on since November 2025, prompting us to consider possibilities of sharper fall, with 200 day SMA positioned deep at 25039 now.”(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)
