Stock market crash erases Rs 11 lakh crore investors’ wealth! Sensex plunges over 2,500 points on oil prices, US Fed decision – top reasons for fall

Why is stock market down today? Key reasons

Oil prices surge past $110Crude oil prices climbed back above the $110 mark after a brief pause in their sharp rally, driven by escalating tensions in the oil-rich Middle East and the continued closure of the Strait of Hormuz.Qatar’s state-owned energy firm, QatarEnergy, reported that Iranian missile strikes on Ras Laffan — a key hub for LNG processing — caused “extensive damage.” At the same time, the UAE shut down certain gas facilities after intercepting missiles early Thursday. At 9:15 AM, Nifty50 was trading at 23,222.95, down 555 points or 2.33%. BSE Sensex was at 74,880.71, down 1,823 points or 2.38%.US President Donald Trump warned Iran against targeting Qatari LNG assets again, stating that any such move would lead to the “massive” destruction of the South Pars Gas Field. He also claimed that Israel had carried out strikes on South Pars without informing either Qatar or the United States.Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited said, “The uncertainty surrounding the war has turned worse with Israel hitting the world’s largest LNG refinery in Iran. Brent crude has shot up to $111. This is bad news for oil and gas importers like India. If Brent remains above $110 for an extended period of time, that will have negative implications for India’s macros. India’s GDP growth and corporate earnings in FY27, too, will be impacted. But this scenario need not play out in the fast changing scenario. A prolonged war is no one’s interest. Therefore, a sudden end to the war bringing crude prices sharply down cannot be ruled out. The market has been exceedingly volatile in response to developments on the war front and crude prices. Last three days of recovery in the market is likely to be wiped out if the war escalation continues.”US Fed flags persistent inflation concernsUS Federal Reserve Chair Jerome Powell said the central bank has opted to hold interest rates steady, citing inflation that has not eased as much as anticipated. He pointed to ongoing geopolitical tensions in the Middle East and policy uncertainty linked to President Donald Trump’s shifting tariff stance as contributing factors.The Federal Reserve kept its benchmark policy rate unchanged at 3.50–3.75 per cent, while indicating expectations of firmer inflation, stable unemployment levels, and only one rate cut during the year. “The thing I really want to emphasise is that nobody knows: the economic effects could be bigger, they could be smaller; they could be much smaller or much bigger; we just don’t know,” Powell said.His remarks come amid a surge in oil prices, with Brent crude crossing $110 per barrel last week following the US-Iran conflict and the extended shutdown of the Strait of Hormuz.Policymakers now project inflation at 2.7 per cent by year-end, up from the 2.4 per cent estimate in December, reflecting the impact of higher global oil prices after the outbreak of conflict in the Middle East. Heavy selling in HDFC Bank weighs on marketsShares of HDFC Bank plunged nearly 8 per cent in early trade on Thursday after the lender announced the resignation of its part-time Chairman and independent director Atanu Chakraborty. The bank also said that former CEO Keki Mistry has been appointed as interim part-time chairman, following approval from the Reserve Bank of India.In his resignation letter, Chakraborty said certain developments and practices at the bank over the past two years were not aligned with his personal principles and ethical standards. “This is the basis of my aforementioned decision,” he wrote.Given HDFC Bank’s significant weight in key benchmark indices, the sharp decline in its stock likely exerted downward pressure on both the Sensex and the Nifty, further dampening overall market sentiment.Weak cues from global marketsGlobal equities remained under pressure, with US markets witnessing a sharp decline on Wednesday after the Federal Reserve signalled higher inflation and refrained from announcing rate cuts. The S&P 500 fell 1.36 per cent to close at 6,624.7, marking its lowest finish in nearly four months. The Nasdaq Composite dropped 1.46 per cent, while the Dow Jones Industrial Average slipped 1.63 per cent.The negative sentiment carried into Asian markets on Thursday. Japan’s Nikkei index slid 2.5 per cent, while South Korea’s Kospi declined more than 1 per cent. Hong Kong’s Hang Seng was also lower by 1.4 per cent. In Europe, markets ended Wednesday’s session firmly in the red, with both the UK’s FTSE 100 and Germany’s DAX losing around 1 per cent each.Surge in US bond yieldsUS Treasury yields moved higher after several sessions of decline. The benchmark 10-year yield rose by 6.3 basis points to 4.265 per cent, while the 2-year yield, which is closely tied to expectations around Fed policy, climbed 10.2 basis points to 3.773 per cent.Continued selling by foreign investorsForeign institutional investors remained net sellers in Indian equities, offloading shares worth Rs 2,714 crore on Wednesday. This marked the 14th straight session of net outflows. Although the figure does not include Thursday’s activity, the persistent selling trend in recent sessions has continued to weigh on overall market sentiment.Rupee under pressureThe Indian rupee weakened further, touching a record low of 92.63 against the US dollar.“Persistent pressure from a rising import bill continues to weigh on the currency. Elevated crude oil prices, coupled with ongoing shipment disruptions through the Strait of Hormuz, are increasing concerns over sustained higher import costs for India,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.“The macro backdrop remains unfavourable, with crude likely to stay elevated for a prolonged period, keeping the rupee under pressure. In the near term, the rupee is expected to trade within a weak range of 92.25–92.95 against the US dollar,” he added.(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)