Why is market falling today? Sensex slumps over 800 points: 7 key factors behind Rs 3 lakh crore rout

Sensex tumbled over 800 points to the day’s low of 75,513, while Nifty 50 fell below the 23,650 mark during Friday’s trading session. The selloff today wiped off more than Rs 3 lakh crore from the total market capitalisation of all companies listed on BSE, dragging it down to Rs 473 lakh crore.

All 30 constituents of Sensex traded in the red, with UltraTech Cement, IndiGo, Bharti Airtel, Eternal and others leading losses on the benchmark index, falling up to 2%. This came as India VIX, which measures volatility in the market, jumped more than 4% to 14.08.

The broader markets also extended sharp losses, with Nifty Smallcap 100 and Nifty Midcap 100 indices trading lower. Sectorally, Nifty Auto, Nifty Metal and Nifty Realty, along with a few others, fell around 1% each. The overall market breadth was negative, with NSE seeing 1,847 advances and 673 declines, while 101 stocks remained unchanged.

Here are the 7 key factors pushing the market down today:

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1) Iran-US conflict

The US military announced on Thursday that it had completed a 13th consecutive night of strikes on Iran. Iran-aligned Houthis meanwhile said they had attacked two Saudi oil tankers in the Red Sea, while announcing that they were imposing a naval blockade on Saudi Arabia.
The war between Iran and the US has seen significant escalations this week so far, spooking investors after a fragile ceasefire brought temporary respite to investors earlier.

2) Oil prices rise

Oil prices soared above $100 per barrel for the first time since May after the Houthis said they attacked two Saudi oil tankers in the Red Sea. These attacks sparked worries that the Bab el-Mandeb shipping route could be closed. This waterway connects the Red Sea with the Indian Ocean and is the world’s second most important oil transit channel after the Strait of Hormuz, which also remains affected by the conflict.

With oil prices soaring closer to the highs they hit earlier this year, Goldman Sachs warned that Brent crude could climb to $120 a barrel if disruptions to shipping through the Strait of Hormuz, the world’s most important oil transit route, continue. Its base case remains that tensions in the Middle East will eventually ease.

3) Rupee falls

Rupee opened lower at 96.63 against the US dollar on Friday, compared to the previous close of 96.5725. As the Indian currency heads towards its lifetime low, the Reserve Bank of India likely intervened in the foreign exchange market today, Reuters reported.

“Going forward, the rupee will continue to take direction from the US Dollar Index, crude oil prices, and FII flows, which remain key drivers for the domestic currency. Technically, the rupee is expected to trade in the 96.25–96.90 range in the near term,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.

4) FII selling

Foreign investors remained net sellers of Indian equities on Thursday, offloading shares worth over Rs 2,999 crore, according to provisional data on NSE. After a long buying streak earlier this month, foreign investors have mostly been on a selling spree since mid-July.

Persistent selling by foreign investors dampened sentiment on Dalal Street, which in turn can lead to some market downturn.

5) Weak global cues

Dalal Street is today accompanying global peers in the selloff. South Korea’s Kospi, which continues to remain in the bear market despite being the world’s best performing stock market of 2026, crashed another 6% to 6,678.

Japan’s Nikkei tumbled 3%, while Taiwan Weighted plunged over 2%. China’s Shanghai Composite and Hong Kong’s Hang Seng fell over 1% each.

6) Fed rate hike expectations

The rising oil prices and resulting inflationary pressures increased expectations of the US Federal Reserve hiking interest rates. Traders are now pricing in a 82% likelihood that the American central bank will hike interest rates at its September policy meet, as per CME’s FedWatch tool.

7) Bond yields rise

US Treasury yields jumped, further dampening equity market sentiment. The yield on benchmark US 10-year notes rose to 4.708% while the 30-year bond yield rose to 5.174%. Rising bond yields typically make bonds more attractive to investors, which in turn can lead to some downtrend in markets.

What lies ahead?
The total uncertainty and high volatility in markets continues without any signs of immediate respite, VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted. He added that the attack on Saudi tankers by the Iran-backed Houthis in the Red Sea is the main reason for the recent sharp spike in Brent crude to about $100. “Such high price is bound to revive India’s Balance of Payments concerns. Rupee too has been impacted, though mildly, with the currency depreciating to 96.57 to the dollar,” he said.

“With the rupee weakening again, FPIs who had turned buyers on many days this month have again shifted to the sell-mode. The spike in the US 10-year yield to 4.7% is negative for equity markets globally. This is a near-term risk,” the analyst said.

New tariff tantrums remains a key watch
Another key watch will be how Trump’s new set to tariffs plays out. The United States slapped 10% tariffs on goods purchased from India and 16 other countries over what it called their failure to impose bans on imports made with forced labour. This comes as a temporary 10% global tariff expires.

This marks the White House’s latest effort to restore US President Donald Trump’s campaign vision of a near-global tariff after the US Supreme Court in February struck down his “reciprocal” duties of 10% to 50% imposed last year under a national emergencies law.

Pakistan, Bangladesh, Cambodia, Sri Lanka and the UK have also been slapped with 10% tariffs. Notably, India amended its foreign trade policy to prohibit the import of goods produced using forced labour in June this year. US had initiated another investigation in March alleging excess capacity in certain goods.

Technical view on Nifty
Nifty 50 has broken down below the upward consolidation on the daily chart, suggesting a rise in bearishness in the market, said Rupak De, Senior Technical Analyst at LKP Securities. He added that the index has fallen below the critical short-term moving average.

“The RSI indicator shows a bearish crossover and is falling. Sentiment looks negative, and the market might continue to remain weak in the near term. On the lower end, the index might fall towards 23,600 or even lower in the near term. On the higher end, 24,000 might remain a resistance for the next few days,” De said.

(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)