Indian Stock Market Falls Today As Elections Cheer Fade: Why Sensex Fell 620 Pts & Nifty Sank 197 Pts Today?

The cheer from the assembly election has likely faded in the Indian stock market as the Sensex and Nifty are trading on a weakened note today, May 5th. Despite the BJP's historic win in West Bengal since Independence, Sensex dropped nearly 620 points to struggle around the 76,700 mark and Nifty plunged by 197 points to fall near 23,930 levels. The reason for the market drop on Tuesday is not the election outcomes but global trends and intensifying geopolitical tensions. Crude oil prices remain elevated, fueling the energy crisis and escalating inflationary pressures. Near-term market sentiment ranges from cautious to bearish.

Sensex Today:

At the time of writing, Sensex dropped by 543 points or 0.7% to trade around 76,722. Just few minutes ago, Sensex nosedived by 620.15 points to hit an intraday low of 76,649.25.

Nifty Today:

Following the bearish tone, Nifty 50 has plummeted by at least 196.4 points to hit a intraday low of 23,922.90. At the time of writing, the benchmark slipped by 174.95 points or 0.72% to trade at 23,944.85.

What is impacting Sensex and Nifty today?

As per Ponmudi R, CEO of Enrich Money, Indian equity markets opened on a weak footing, weighed down by subdued global cues and persistent geopolitical tensions. The gap-down start reflected a clear risk-off sentiment, with broad-based selling across sectors.

Elevated crude oil prices, hovering in the $100-105 per barrel range, remain a key overhang, intensifying concerns around inflation, India's import bill and the broader macroeconomic outlook, thereby capping any meaningful recovery.

Also, the expert added that the Indian rupee continues to face pressure amid high crude prices and sustained capital outflows, adding to currency volatility.

At present, the rupee has slipped to fresh record lows to 95.4 per dollar. Rupee has depreciated by 13% so far in a year.

5 Big Reasons To Why Market Is Down Today:

1. Sell-offs In Large-Caps

Broadly, the market is pulled downward due to steep selling pressure in large-cap stocks. For instance on Sensex, L&T, ICICI Bank, Eternal, HDFC Bank, Trent, SBI, Indigo, Axis Bank, NTPC, Bajaj Finance, Adani Ports, M&m, Bajaj Finserv, Tech Mahindra, Power Grid, Hindustan Unilever, Asian Paints, Bharat Electronics, Sun Pharma, Reliance Industries, and HCL Tech are down by 0.5% to 2%. Majority of them have plunged by more than 1%. But ICICI Bank and L&T take the lead in the losers list with nearly a 2% drop.

These are the heavyweights of Sensex and Nifty.

2. Bank Nifty Slips 1%

BANK Nifty has dropped by at least 527 points to hit an intraday low of 54,351.20. The index is currently down by 1%. Except Kotak Bank, all major banking stocks are down. HDFC Bank, ICICI Bank, Axis Bank and SBI are the biggest draggers of the day.

3. Oil & Gas, Realty, Financial Services & Auto Stocks Drag Too

Nifty Auto, Nifty Financial Services and Nifty OIL & Gas indexes are down by 1%. Meanwhile, Nifty Realty has dropped by 2%, emerging as the top loser.

4. Global Market Under Pressure

The global market is under pressure. Asian stocks witnessed a noticeable decline after Wall Street pulled away from its record highs overnight. Hang Seng index is down by over 1%, while Australia's S&P/ASX 200 is down by 0.5%. Taiwan's Taiex index is also down. On the other hand, Japan, South Korea and China have public holidays.

Overnight, at Wall Street, Dow Jones dropped by 1.13%, while S&P 500 index slipped by 0.41% and NASDAQ Composite was marginally down.

5. Middle East Faces New Unrest

The four-week ceasefire of US-Iran is likely to be derailed due to the Strait of Hormuz, which is currently the hotbed of the conflict. The peace proposal of either the US or Iran has met no mutual agreement so far.

In the latest development, US forces repelled Iranian attacks while escorting two US-flagged vessels through the Strait of Hormuz, while the UAE reported intercepting cruise missiles launched by Iran and attributed a major fire at its Fujairah port to a drone strike, as per Trading Economics.

Indian Stock Market Outlook:

In Ponmudi's view, near-term market sentiment remains cautious to negative and largely news-driven, with elevated volatility and downside risks likely to persist unless geopolitical tensions show signs of easing.

Further, Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments said, The sentimental boost provided by the BJP's electoral victory in W Bengal will not last. The market trend will be guided by the developments in West Asia particularly in the Strait of Hormuz

As per Vijayakumar, the resumption of hostilities in the Hormuz region and Brent crude again spiking to around $113 are headwinds for the market. Also the US-10-year bond yield rising to 4.44% and rupee sliding to 95.23 level are unfavourable from the FPI flows perspective. Yesterday's cash market buy by the FIIs is unlikely to be the beginning of a trend. In the near-term the market will respond to Q4 results and management commentary.

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