Stock Market Crash: Five Reasons Why Sensex and Nifty Are Falling Today

The Indian stock market faced a significant downturn today as both Sensex and Nifty 50 indices tumbled, erasing investor wealth worth over ₹10 lakh crore. Concerns around global uncertainties and domestic pressures triggered a broad-based sell-off.

Market Performance Overview

Sensex: The BSE Sensex opened sharply lower at 75,700.43, compared to Friday's close of 76,190.46, and slid further to an intraday low of 75,348.06, down by 842 points or over 1%.

Nifty 50: The index breached its critical support level of 23,000 and fell to a low of 22,826.85, down 266 points or 1.15%.
By 11 AM, the Sensex was trading at 75,899, down 600 points or 0.77%, while the Nifty stood at 22,888, down 198 points or 0.87%.

Broader Markets

Nifty Midcap 100: Declined by 2.25%.

Nifty Smallcap 100: Fell sharply by 3.66%.

Sectoral Indices

All sectors traded in the red, with Nifty Media and Nifty Pharma being the worst hit, both dropping over 2%. Other notable declines included:

Nifty Auto, IT, Metal, Oil & Gas: Down between 1.5% and 2%.

Key Highlights: 5 Reasons Behind the Market Crash

1. Sustained FPI Selling

Foreign Portfolio Investors (FPIs) have sold a massive ₹69,000 crore in January so far. Despite Domestic Institutional Investors (DIIs) buying ₹67,000 crore, it hasn't been enough to offset the selling pressure, as per VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

2. Global Concerns: Trump Tariff Threats

Market sentiment turned cautious following U.S. President Donald Trump's tariff threats. Trump's announcement of a 25% tariff on Colombia for refusing to take back deported illegal immigrants, and potential tariffs on Canada and Mexico from February 1, have added uncertainty. These developments, coupled with fears of further trade actions against China and other countries, are rattling global markets.

3. Nifty 50 Technical Outlook

Sameet Chavan, Head of Research at Angel One, noted that the market’s sharp correction of over 12% is nearing a key support zone. The weekly chart indicates a Falling Wedge pattern, with critical support between 22,900-22,800. This level, coinciding with the 127% retracement of the November bounce, may act as a cushion for bulls during the volatile budget week. Positive divergence in RSI, currently in the oversold zone, signals potential short-term relief.

4. Rupee Weakens Against the Dollar

The rupee opened weaker at ₹86.44 per dollar, down 22 paise, as uncertainty around Trump's tariffs weighed heavily. Meanwhile, the dollar index strengthened to 107.67, up 0.21%, adding further pressure.

With the Union Budget just days away, market volatility is expected to intensify. Key expectations include fiscal stimulus, income tax cuts, and measures to attract foreign investments.

VK Vijayakumar warned that failure to meet market expectations could extend the sell-off, with the next support for Nifty 50 around 22,500. Meanwhile, the Federal Reserve's decision this week adds another layer of uncertainty.

Market Cap Erosion

As per BSE data, the total market capitalization of BSE-listed companies fell from ₹42,08,667.46 crore on Friday to ₹41,07,746.52 crore by 11:45 AM, erasing over ₹10 lakh crore of investor wealth.

The coming days are crucial as investors eye the Union Budget and other global developments for clarity. A relief rally may be possible if budget measures inspire confidence, but sustained growth hinges on positive economic data and corporate earnings recovery.