Sensex crashes over 700 points, India VIX jumps 10%; 5 key factors driving the stock market down explained
AI Summary
The Indian stock market experienced significant losses on July 13, with the Sensex and Nifty 50 both falling nearly 1% due to weak global cues and escalating tensions between the US and Iran, which have raised concerns about inflation and potential monetary tightening. The market capitalization of BSE-listed firms decreased by nearly ₹2 lakh crore, while crude oil prices surged above $79 per barrel, further impacting investor sentiment.
The Indian stock market suffered significant intraday losses on Monday, 13 July, with the benchmarks, the Sensex and the Nifty 50, falling nearly 1% each amid weak global cues.
The Sensex dropped over 700 points, or nearly 1%, to an intraday low of 76,857, while the Nifty 50 shed more than 200 points, or nearly 1%, to an intraday low of 24,000.
The mid and small-cap segments also declined. The Nifty Midcap 100 and Smallcap 100 indices also dropped by up to 1%.
The overall market capitalisation of BSE-listed firms dropped to ₹480 lakh crore from ₹481.75 lakh crore in the previous session, making investors poorer by nearly ₹2 lakh crore.
Bank Nifty, Nifty Financial Services, Nifty Metal, and Nifty Auto dropped up to 1% in the morning trade.
Experts highlight the following five factors behind the crash in the stock market:
The US and Iran have exchanged heavy missile and drone assaults over the last few days, with media reports claiming Tehran has again closed the Strait of Hormuz.
The US Central Command (CENTCOM) on Saturday (local time) announced that it completed a third round of strikes this week against Iran, holding Iranian forces accountable for attacking another commercial ship in the Strait of Hormuz.
Escalating tensions between the US and Iran have revived concerns about inflationary pressures, which could prompt aggressive monetary tightening by the US Federal Reserve and other major global central banks.
Crude oil benchmark Brent crude jumped over 4% to trade above $79 per barrel on Monday due to the tensions between the US and Iran.
A spike in oil prices has reignited concerns about its impact on India's fiscal math, as the country is the world's third-largest importer of crude oil and meets about 85–90% of its total crude oil requirement through imports.
"The back-and-forth in the West Asia crisis has become the new normal. From a market perspective, crude oil prices are a crucial factor. There is no panic in the oil market like in March. Brent is currently trading around $79. So long as Brent trades below $90, the market won’t be impacted significantly. But if Brent shoots up to above $90, there can be a significant correction in the market," VK Vijayakumar, Chief Investment Strategist, Geojit Investments, noted.More to come…
Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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