Stock Market Crash: Nifty, Sensex Fall Over 1% — Key Drivers Behind Market Decline

Indian stock markets decline on Thursday, buoyed by negative global cues and fears of higher fiscal deficit in the US. The Nifty 50 fell 1.41% to hit 24,462.40, while the Sensex declined by over 1,106 points to 80,489.92.

The benchmark indices regained a little but ended the session in red. Nifty closed 0.82%, or 203.75 points lower at 24,609.70, while Sensex closed 0.79%, or 644.64 points down at 80,951.99.

US President Donald Trump's continued efforts to pass his spending and tax-cut bill through Congress have added to the market's uncertainty, said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.

The recent 20-year bond sale reinforced the 'Sell America' narrative, impacting bond yields and Wall Street, with the S&P 500 falling by 1.61% and the Dow Jones by 1.91% overnight, he added.

The volatility index VIX was up 0.70% on Thursday.

Global Cues

Global markets fell due to concerns about a proposed tax-cut bill that would threaten to enlarge the US deficit. The S&P 500 also posted a strong decline on Wednesday, with the Dow falling over 1.91% and the Nasdaq down 1.41%.

Asian indices mostly followed suit—South Korea's Kospi fell 1.22%, Australia's ASX 200 declined 0.45%, and Taiwan's Taiex was down 0.61%. China's Shanghai Composite was also down 0.22%.

"Investors appear sceptical of President Donald Trump's tax-cut proposals, contributing to overall caution," said Vikas Jain, Head of Research at Reliance Securities.

Weekly Expiry

In addition, Thursday is also the weekly expiry of the Nifty, which generally results in extreme moves on either side for the index.

Rupee

The Indian rupee opened 6 paise stronger at 85.58 against the US dollar on Thursday, compared to its previous close of 85.64 on Wednesday. This slight appreciation comes amid a mixed global economic landscape and ongoing fiscal concerns in the United States.

However, it fell to one month low on Thursday. Rupee fell 42 paise to 86.06 against US Dollar, it's the lowest level since April 11.

The US dollar faced pressure due to fiscal concerns and a lackluster auction of Treasury bonds, which pushed the dollar to a two-week low against the yen, now at 143.24. The dollar index remained unchanged at 99.48, while the US 10-year Treasury yield rose to 4.59%.

In the commodities market, Bitcoin reached an all-time high, and gold prices surged to $3,338 per ounce, benefiting from safe-haven demand. The euro, yen, and gold emerged as the main beneficiaries of this trend.

Oil

Oil prices edged lower with Brent crude at $63.90 and WTI at $60.59. Brent oil prices fell after data showed a surprise buildup of inventory, coupled with uncertainty over renewed US-Iran nuclear talks, fueling oversupply concerns, Bhansali said.