Stock Market Crash: Sensex Plunges 700 Points, Nifty Breaks 23,300 As Crude Tops $100; Why Is Market Falling?

Dalal Street hit the brakes on Friday as heavy selling led to both the benchmark indices tumbling at the opening bell.

The BSE Sensex plunged 704 points, or 0.94%, to open at 74,198, and slipped further in early trade. The index fell as much as 742.43 points to touch an intraday low of 74,160.80.

The Nifty 50 was equally under pressure, opening 237 points, or 1.01%, lower at 23,270.30. The index quickly breached the 23,300 mark, sliding to an intraday low of 23,231.40.

However, the benchmark indices recovered slightly from their opening lows. As of around 10:30 AM, the Sensex was trading 573 points lower at 74,328.69, while the Nifty 50 stood at 23,274.80, down 203 points. Moreover, the market mood today is quite bearish.

The broader market was hit harder as Nifty MidCap 100 is down 1.42%, while Nifty SmallCap is down 1.40%. If we look at the sector-wise Nifty, Realty was the top loser, which tumbled over 3%; Hindalco Industries, Tata Steel, and Bajaj Finance were among the top losers.

At the same time, the Indian rupee followed the weak market sentiment, opening 24 paise lower at 95.69 against the US dollar, compared to Thursday's close of 95.45.

Why is the Stock Market Falling?

The market today is mostly affected by the global cues rather than domestic factors. Crude oil prices have surged sharply as the war between the US and Iran enters its seventh month; Brent crude futures climbed to 4 months high to around $108 a barrel at the time of writing, while US West Texas Intermediate (WTI) crossed $100 a barrel, touching the highest closing levels since May 19. WTI is now up 52.9% since the war began at the end of February and up 78.5% year-to-date.

The US Treasury stock market is falling, as the elevated oil prices are making investors expect higher inflation in the US, delaying the rate-cut cycle from the US Federal Reserve.

US Markets Decline for a Fourth Straight Session

Wall Street closed lower for the fourth consecutive session on Thursday, September 10, as oil prices topped $100 a barrel. The Dow Jones Industrial Average fell 316.56 points, or 0.6%, to end at 52,064.10. The S&P 500 declined 0.58% to close at 7,591.70, while the Nasdaq Composite slid 0.65% to settle at 26,081.72.

Asian Markets Follow the Lead

The weakness on Wall Street and the surge in crude oil have hit Asian markets hard on Friday. Japan's Nikkei 225 was among the worst hit, falling around 1,820 points, or 2.79%, to trade near 63,450. South Korea's Kospi dropped 177.25 points, or 2.52%.

Hong Kong's Hang Seng Index fell nearly 1%, while the Shanghai Composite fell 1.82% to 3,862.73

Stock Market Outlook Ahead

"Technically, the short-term market outlook remains weak, but due to temporary oversold conditions, we could see a pullback rally from current levels," according to Shrikant Chouhan, Head of Equity Research, Kotak Securities

"For day traders, 23,350/74,600 could act as key support zones, while 23,500/75,000 could be immediate hurdles for bulls. A move above 23,500/75,000 could extend the bounce back towards 23,600-23,650/75,200-75,400. Conversely, below 23,350/74,600, selling pressure is likely to increase. If the market breaks below these levels, it could slide towards 23,250-23000/74,200-73300."

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