The Indian stock market has experienced a severe decline, with ₹11 lakh crore being wiped out in just four trading sessions. According to reports from Mint, the Sensex and Nifty 50 declined about 1% in intraday trade on Tuesday, marking the fourth consecutive session of losses. The cumulative market capitalisation of BSE-listed firms dropped to ₹462 lakh crore on Tuesday from ₹473 lakh crore on Wednesday, 6 May, representing a 3% decline over the four-day period. Latest data shows the Sensex crashed over 1,300 points on 11 May, falling to 76,015.28 with a 1.70% decline, while the Nifty 50 dropped 360.30 points to 23,815.85, marking a 1.49% decline.
The market decline is attributed to a confluence of strong headwinds, as reported by Mint. These include the Middle East conflict, higher crude oil prices, a weaker rupee, massive foreign capital outflows, and waning expectations of monetary easing. The US-Iran conflict has particularly impacted markets, with US President Donald Trump rejecting Iran's proposals as 'totally unacceptable' and warning that the ceasefire was on 'massive life support'. Tehran has responded by stating it was ready for any aggression, adding to geopolitical tensions. Latest developments show oil prices surged and investors shifted to risk-off positioning, with Asian markets also trading lower following renewed US-Iran tensions and rising energy prices.
According to market analysts cited by Mint, the Nifty 50 has breached 23,600 on the downside and is heading toward the next major support at 23,500. Rohit Srivastava from Indiacharts.com noted that if 23,500 breaks decisively, the index could potentially fall toward 23,100. Ajit Mishra from Religare Broking indicated that given weak global cues and the impact of Prime Minister Narendra Modi's austerity call on market sentiment, the index could fall further to 23,500 or even lower. The market has been consolidating within a broad range of 23,800 to 24,500 for nearly three weeks, but recent developments suggest the index is now trading in a high-risk macro-driven phase where markets are being driven almost entirely by macro variables rather than momentum.
Foreign investors have aggressively reduced exposure to Indian equities, with FIIs selling ₹8,438 crore worth of equities on 11 May, marking the biggest daily outflow since April 24. The Indian rupee recorded its steepest decline in over a month, hitting an all-time low at 95.31/USD due to rising oil prices and heavy dollar demand from importers. This currency weakness has compounded the market pressure, with the rupee's decline adding to inflationary concerns and making imports more expensive for Indian companies.
State Bank of India came under significant pressure, losing over $11 billion in market value in just two sessions after weak earnings and concerns around margin compression triggered brokerage downgrades. The banking sector has been particularly affected by the surge in crude oil prices, with energy-sensitive sectors facing increased cost pressures. GIFT Nifty traded nearly 0.9% lower, indicating continued bearish sentiment for Indian equities and signaling another weak opening for the current session.
