Why Did the Stock Market Crash in the Final Hours of Trading Today? Sensex and Nifty 50 Plunge — Key Reasons Explained
Indian equity markets fell sharply on Friday as investors reacted to a mix of domestic and global concerns, triggering a broad selloff across large-cap, mid-cap and small-cap stocks. The benchmark Sensex dropped 1,092.26 points, or more than 1%, to close at 74,775.74, while the Nifty50 declined 359 points to end at 23,547.75. The day’s rout erased nearly Rs 5 lakh crore in investor wealth and pushed volatility higher, with the India VIX rising about 9% to 16.35.
The decline was led by weakness in power, financial, metals, pharma and infrastructure-related shares. Power Grid was the biggest laggard on the Sensex, falling more than 4%. IndiGo lost over 3% ahead of its quarterly earnings announcement, while Bajaj Finance, UltraTech Cement, Tata Steel, Sun Pharma and NTPC each slipped by more than 2%. In contrast, Tech Mahindra and HCLTech managed to buck the trend and gained nearly 2% each.
A major reason for the market correction was the India Meteorological Department’s forecast of below-normal monsoon rainfall for the June to September period. The IMD said rainfall is likely to be 90% of the long-period average, reviving fears of higher food inflation, weaker rural demand and possible stress on consumption. Market participants also worried that the outlook could be the weakest monsoon forecast in 11 years, especially as El Niño conditions continue to influence weather patterns. Analysts said the forecast prompted broad-based selling as investors adjusted expectations for inflation and economic growth.
Geopolitical uncertainty added to the pressure. Investors remained cautious over the status of the US-Iran ceasefire and the possibility of a broader peace agreement. While reports suggested the ceasefire may be extended for 60 days, final confirmation was still pending, and comments from US officials indicated that some language and enrichment-related issues remained unresolved. The lack of clarity kept global investors on edge and limited appetite for risky assets.
Foreign investor selling also continued to weigh on Indian markets. Provisional NSE data showed that foreign institutional investors sold Indian equities worth Rs 1,043 crore on Wednesday. FIIs have been net sellers in 13 of the 18 trading sessions in May, adding persistent pressure on domestic benchmarks even as corporate earnings have remained relatively resilient.
The weakness was not limited to the main indices. The Nifty Smallcap 100 and Nifty Midcap 100 each fell around 1%, reflecting wider risk aversion. Among sectoral indices, Nifty Oil & Gas dropped about 2.5%, Nifty Metal lost more than 2%, and Nifty IT was the only major sector to close slightly higher.
Despite Friday’s sharp fall, some analysts pointed to improving earnings trends and easing crude prices as stabilising factors. Brent crude fell nearly 2% to below $92 per barrel, while WTI crude slipped to around $87. The rupee also strengthened by 53 paise to close at 95.05 against the US dollar, with reports suggesting RBI intervention helped support the currency. Analysts said the market may remain volatile in the near term, but strong Q4 earnings in sectors such as financials, automobiles and metals could support sentiment over time.
