Sensex drops 238 points, Nifty 50 ends at 24,188. What drove the market down today?

Stock market today: The Indian stock market ended lower on Tuesday, 21 July, with the benchmarks, the Sensex and the Nifty 50, extending losses for the second consecutive session as escalating tensions in the Middle East and rising crude oil prices continue to weigh on market sentiment.

The Sensex ended 238 points, or 0.31%, lower at 77,470.11, while the Nifty 50 settled at 24,187.70, falling 51 points, or 0.21%. The mid and small-cap segments continued their outperformance on expectations of healthy Q1 earnings. The Nifty Midcap 100 index rose by 0.30%, while the Smallcap 100 index climbed 0.53%.

Tensions between the US and Iran, and the rise in crude oil prices resulting from them, are the main reasons behind the decline in the benchmarks.

Iran-backed Houthis, as per reports, have said they would impose a naval blockade on Saudi Arabia, signalling the conflict in the region is further intensifying.

Houthis' warnings have raised the risk of global energy supply disruption.

Crude oil prices have risen again after easing slightly in early trade. The Brent crude September contract traded near $90 per barrel when the Sensex closed.

Elevated oil prices have revived concerns about inflation and fuelled expectations of US Federal Reserve interest rate hikes.

"At present, the broader market is trading in a mixed range, reflecting large caps' underperformance driven by moderating inflows amid rising geopolitical risks and higher crude oil prices," Vinod Nair, Head of Research, Geojit Investments, noted.

Nair pointed out that midcaps are performing well in anticipation of strong corporate earnings, supported by demand-led business updates

"While this segment’s elevated valuations compared to large caps warrant caution, underlying business conditions are expected to remain healthy at least through the first half of FY27. However, sustaining this momentum will require the ongoing spike in input costs to normalise as demand growth may tend to become flattish in the second half of FY27," said Nair.

Selling by foreign portfolio investors (FPIs) is also a key factor behind the decline in the headline indices. After buying Indian stocks in the cash segment sporadically in early July, FPIs have resumed their selling spree amid a jump in crude oil prices and increased macroeconomic risk.

Despite the decline in the benchmarks, as many as 33 stocks ended higher in the Nifty 50 index.

Shriram Finance, Bajaj Finserv, and Eicher Motors ended as the top gainers in the index, while HDFC Bank, Infosys, and State Bank of India (SBI) ended as the top laggards.

(This is a developing story. Please check back for fresh updates.)

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.