Nifty Down Over 1%, Sensex Falls 1000 Points — Three Reasons Why Markets Are Crashing Today

Nifty and Sensex have opened the week under pressure, with overnight geopolitical tensions casting a shadow over any hopes of recovery with US and Iran again coming to a standstill in terms of negotiations. Prime Minister Narendra Modi's call for Indians to conserve fuel, avoid unnecessary foreign travel and even postpone non-essential gold purchases has also put a wide swathe of stocks in focus, from oil marketing companies to consumer and hospitality names.

Nifty is trading with cuts of over 1.28% (around 300 points lower) at 23,867.05. Sensex, meanwhile, is also 1.38% lower (1050 points lower) at 76,258.59, as of 10:20 am.

The Indian rupee opened weaker against the US dollar and fell as much as 43 paise to 94.91 in early trade.

All sectors are trading in red, with Nifty Realty, and PSU Bank tarding over 2% lower, followed by Media, Auto, Bank, Consumption, and Financial Services trading with cuts of oevr 1.5%.

The broader market is slightly overperforming the benchmarks, but is also facing pressure with the Nifty Smallcap 250 falling almost 1.15%, and the Nifty Midcap 150 dropping about 1.01%.

Here are three reasons why markets are crashing today:

Geopolitical Tensions Rising

Iran has rejected the US peace plan, instead demanding war reparations, recognition of its control over the Strait of Hormuz, an end to US sanctions, and the release of its frozen assets. US President Donald Trump has rejected Iran's proposal to end the months-long war as “totally unacceptable” without sharing details even as a key Republican leader urged him to consider the “military option”.

ALSO READ: 'Unacceptable': Trump Rejects Iran's Response To US Peace Proposal

Trump received the Iranian proposal on Sunday amid hopes that it could lead to a breakthrough to end the war with Iran that began on February 28, blocking the key sea route for global oil supplies, leading to fuel shortages in several countries.

Get the latest updates on the US-Iran war here. 

Meanwhile, Prime Minister Narendra Modi on Sunday called on Indians to revive pandemic-era work-from-home practices, reduce dependence on petrol and diesel, and defer foreign travel — framing the measures as acts of national duty in the face of the escalating West Asia conflict.

ALSO READ: Modi Revives Covid Playbook Amidst West Asia Tensions — Suggests Work From Home, Carpool As Crude Boils

Modi said the global crisis demanded collective sacrifice and a sense of purpose. "We have to make a resolution keeping duty paramount and fulfil it with complete dedication," he said. On fuel conservation, the Prime Minister urged citizens in metro-connected cities to switch to public transport and encouraged carpooling for those who must drive. He also called on electric vehicle owners to maximise their use of EVs.

Crude Prices Resume Rally

Oil prices surged on Monday after US President Donald Trump rejected Iran's latest proposal to end the conflict in the Middle East, dashing hopes of a quick breakthrough and reinforcing fears that the Strait of Hormuz will remain severely disrupted.

ALSO READ: Oil Rally Resumes With Brent Crude Near $105 After Trump Calls Iran Response 'Unacceptable'

Brent crude rose as much as 3.5% to $104.80 a barrel, while West Texas Intermediate climbed toward $99. The move extended the geopolitical risk premium that has gripped energy markets since the conflict began in late February.

A survey by Goldman Sachs Group found that most respondents expect disruptions in Hormuz to continue well into the second half of the year.

ALSO READ: Double Whammy: Higher Oil Prices, Weaker Rupee Could Push India's Current Account Deficit To A 14-Year High

Rupee

The Indian rupee has opened considerably weaker against the US dollar on Monday, depreciating by almost half a percent amid global jitters, including tension in the Middle East and rising crude prices.

The local currency opened at Rs 94.88 on Monday, which accounts for a 40 paise depreciation compared to Friday's closing price of Rs 94.48.

ALSO READ: Rupee Weakens By Over 40 Paise Amid Rising Crude Prices, PM Modi's Appeal

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