Stock Market Crashed On February 17: Why Sensex Dropped 645 Pts & Nifty Fell 204 Pts On Monday?

Stock market crashed: Broad-based selling pressure dragged the Indian stock market in the early trade of Monday, February 15. Sensex erased as much as 645 points to hit below 75,300 levels, while Nifty 50 nosedived by about 204 points to breach the 22,750 mark. So far this year, both benchmarks have underperformed in major global markets, signalling reversion from the overvaluation that was recorded between 2023 and 2024. Key reasons for market downfall this time would be a sharp slowdown in corporate results and stubborn selling by FIIs.

Sensex, Nifty:

At the opening bell, Sensex dropped by 644.45 points to hit an intraday low of 75,294.76. The 30-scrip benchmark currently traded at 75,395.87, lower by 543.34 points or 0.72%. Stocks like M&M, ICICI Bank, Tata Steel, Bharti Airtel and Axis Bank were top losers, with a downside of 1% to 5%.

BSE Sensex Next 50 dropped by nearly 990 points, while BSE Bankex shed over 600 points. BSE-listed companies' market cap fell to below Rs 396.46 lakh crore.

Meanwhile, Nifty 50 dropped by 203.8 points to hit an intraday low of 22,725.45. Currently, the benchmark traded at 22,770.35, down by 158.90 points or 0.7%. Bank Nifty tumbled by 510 points.

India's volatility index surged by 8.4%. While Nifty Midcap 100 and Nifty Smallcap 100 indexes were down between 1% to 1.5% but had plunged by 2% each in the opening bell.

Except marginal upside in Nifty Pharma, all other sectoral indices were in deep red. Nifty Metal was down 1.22%, while Nifty PSU Bank dropped by 1.4%. Nifty Realty index that had dipped 3% in the opening bell, is currently down by 1.6%. Nifty Auto is down by 1.7%, emerging as the top laggard.

Why Stock Market Is Falling Today?

Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services highlighted that the Indian stock market is underperforming this year with the Nifty delivering negative 3.4% returns vis-a-vis 4.19 % returns in S&P 500 and 11.7 % returns in Europe. The underperformance of the broader market is huge with 9.6% cut in Midcaps and 22% cut in Smallcaps.

He said, "This is clear reversion to mean from overvalued territory."

Explaining key reasons to bearish trend in market, Vijayakumar said, the basic reason for this underperformance is the sharp slowdown in corporate earnings this year. Q3 results indicate only around 7% earnings growth. The fact is that a modest single digit earnings growth doesn't deserve high valuations. This is the basic reason behind the relentless FII selling which has impacted the market. Appreciating dollars aggravated the problem.

Going ahead, Vijayakumar said, "Only indications of an earnings recovery and declining dollar can reverse the weakening market trend. This may happen soon. India's macros are strong and a growth and earnings recovery are on the cards. Inflation in the US is likely to rise, thanks to the Trump tariffs, and the Fed is likely to respond hawkishly to that pulling the US markets and dollar down. This will happen, but we don't know when."

Coming to FIIs, Aakash Shah, Technical Research Analyst at Choice Broking highlighted that on the institutional front, foreign institutional investors (FIIs) extended their selling streak for the eighth consecutive session, offloading equities worth ₹4,294 crore on February 14. In contrast, domestic institutional investors (DIIs) remained net buyers, purchasing equities worth Rs 4,363 crore on the same day. Given the prevailing market dynamics, traders are advised to exercise caution and wait for confirmation of price action at critical levels before initiating fresh positions.

To investors, Shah said, "Traders should closely monitor price action around these levels for potential short-term opportunities."