Nifty Falls Below 25,900, Sensex Falls Nearly 800 Points — Why Was The Indian Stock Market Falling? Explained

The Sensex and the Nifty 50 extended losses for the fourth consecutive session on Thursday taking cue from Asian markets that fell due to weak US economic data and rising geopolitical tensions.

Nifty fell below 25,900, while Sensex was down over 500 points. The broader segment of the market was also in the negative, with the Nifty Midcap 100 falling 1.88% and Smallcap 250 index down 1.94%.

Nifty 50 closed nearly 1% lower at 25,876.85, while Sensex was down 0.92% to 84,180.96.

Volatility index VIX rose over 8% on Thursday.

Asian equities fell on Thursday extending the decline for the second session taking cue from weak US economic data and the rising geopolitical tensions. Japan Nikkei Index fell 1% while Hong Kong's Hang Seng fell 1.4%. Asia Pacific MSCI index was also down 0.53%.

In addition to this US stocks futures were also trading lower after hitting multiple highs this week. The S&P 500 futures fell 0.2% while Euro Stoxx futures were down 0.1%.

All sectors were trading in the red with Nifty Metal falling the most. Nifty Metal index fell as much as 3.62% at 11,107.15. The decline was led by Hindustan Zinc, NALCO, Hindustan Copper, Jindal Steel and Vedanta.

Hindustan Zinc emerged as the worst-performing metal stock, falling over 6% to trade at Rs 588.35, its lowest level since Dec. 19.

The decline comes as silver, copper and gold fall on the Multi Commodity Exchange of India. While Nickel settled 3.4% lower at $17,895 a ton on the LME as of 5:55 p.m. London time, Copper closed 2.6% lower at $12,899.50, as all other major metals declined on the exchange.

The options data is suggesting a bearish sentiment. In addition, the FII positioning are coming back to the higher side, and the shots are at 90% in comparison to 87% in the last trading session.

Foreign portfolio investors (FPIs) were net sellers in the Indian market on Wednesday for the third consecutive session.

FPIs offloaded shares worth Rs 1,527.71 crore on a net basis, according to provisional data on the National Stock Exchange Ltd. In the previous session, they sold Rs 106 crore worth of equities.

On the other hand, domestic institutional investors (DIIs) net purchased shares worth Rs 2,889.32 crore, bringing their buying spree to close to 52 sessions.

United States President Donald Trump will allow a bipartisan sanctions bill targeting countries doing business with Russia to advance in Congress, with a vote possible as early as next week. US Senator Lindsey Graham on Thursday highlighted that Trump has “greenlit” the bill, which will penalise nations buying Russian oil. 

This is part of the US’ effort to curb Russia’s financing of the Ukraine war, which has been going on since 2022. The move is expected to hit countries such as India and China.

The bill seeks to raise US import duties on all Russian goods and services to at least 500%. It also contains provisions that can hurt countries like India that deal in Russian oil.

This means India could face sharply higher US import duties. At present, India faces 50% tariffs from the US due to India’s significant purchase of Russian oil.