The stock market crashed, ₹7 lakh crore wiped out in just one day

Profit booking and FPI (Foreign Portfolio Investor) selling dragged the stock market down on Monday in Mumbai. The Sensex closed 609.68 points lower at 85,102.69, while the Nifty ended with a loss of 225.90 points at 25,960.55. As a result, the total market capitalization of BSE-listed companies fell by ₹7.12 lakh crore, dropping to ₹464.19 lakh crore. Out of the 30 Sensex stocks, 29 ended in losses. Let’s take a look at the reasons behind this steep fall.

Uncertainty over interest rates: This week, the monetary policies of central banks from the US Federal Reserve, Australia, Brazil, Canada, and Switzerland will be announced. Among these, the Indian market is eagerly awaiting Wednesday’s Federal Reserve policy update. The big question remains will Fed Chair Jerome Powell cut key interest rates by even 0.25% under pressure from Donald Trump? This uncertainty also contributed to Monday’s losses in the Indian market.

FPI selling: Foreign portfolio investors, who had heavily invested in Indian markets till last year, have turned cautious since the beginning of this year. They have been selling in India and shifting their investments to China, South Korea, and Taiwan. So far this month, these investors have pulled out ₹1.55 lakh crore. On Monday as well, heavy FPI selling dragged the indices further down.

Rupee depreciation: The weakening of the rupee against the US dollar is adding more pressure on FPIs. The rupee, which has already lost around 5% this year against the dollar, slipped another 10 paise on Monday, closing at ₹90.05. With the trade deficit widening, market expectations suggest the rupee might soon fall to ₹92–93 per dollar, increasing market concerns.

Rising crude oil prices: Due to global geopolitical tensions, crude oil prices have started to rise again. On Monday, Brent crude surged to $63.83 per barrel the highest in the last two weeks. This could widen India’s trade deficit and threaten the balance of payments, raising further worries.

Outlook: The Nifty closed below its crucial support level of 26,000. Technical analysts predict the next support zone to be between 25,900 and 25,850. If these levels are also breached, warnings indicate that the Nifty 50 index may slip further to around 25,500.