Sensex Slumps 800 Points As IT Crashes — Three Reasons Why Markets Are Falling Today

Nifty and Sensex continue 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. Over the weekend, 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.

Nifty is trading with cuts of over 0.85% (around 200 points lower) at 23,615. Sensex, meanwhile, is also 1% lower (750 points lower) at 75,259, as of 10:30 am. 

The rupee opened at a record low on Tuesday, weakening by as much as 24 paise to 95.55 against the US dollar in early trade.

All sectors, barring PSU Bank, Metal, Energy, Oil & Gas are trading in red, with Nifty IT leading the losses, slumping over 3%. Nifty Realty, and Media follow, along with Defence.

The broader market is slightly underperforming the benchmarks, also facing pressure with the Nifty Smallcap 250 falling almost 1.27%, and the Nifty Midcap 150 dropping about 0.87%.

Here are three reasons why markets are crashing today:

Geopolitical Tensions Rising

President Donald Trump said the Iran ceasefire is on “life support” after he rejected Tehran's latest proposal to end the war. The Trump administration is calling on banks to flag certain customers who may launder funds for Iran's Revolutionary Guard — including newly formed companies moving unusually large amounts of money, firms that route payments through multiple intermediaries or transactions connected to Iranian crypto firms, among other indicators.

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.

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 And Rupee

Oil prices held onto recent gains after US President Donald Trump cast fresh doubt on the durability of the ceasefire with Iran, renewing concerns that disruptions to Middle East energy flows could drag on for longer. Brent crude traded above $104 a barrel, after climbing 2.9% in the previous session, while West Texas Intermediate hovered near $98.

The market remains focused on the Strait of Hormuz, the critical chokepoint through which a large share of the world's crude, liquefied natural gas, and refined fuels normally passes. 

ALSO READ: Oil Rally: Brent Crude Holds Above $104 As Trump Says Iran Ceasefire Is On 'Life Support'

The rupee hit a record low of Rs 95.63, depreciating 35 paise against US dollar in early trade on Tuesday, May 12 as market sentiments remained uncertain over US and Iran tensions after President Donald Trump said that the ceasefire was on life support.

Rupee opened at Rs 95.57 against the US dollar and then fell further to an all-time low of Rs 95.63, according to data from interbank foreign exchange market. On Monday, the Indian currency dropped 79 paise hitting a low of Rs 95.28 against the US dollar.

ALSO READ: Rupee Hits Record Low Of Rs 95.63 Against US Dollar Amid US-Iran Tensions

IT Sector Falling

IT stocks are under pressure in trade on Tuesday as the sector continues to bleed amid geopolitical uncertainty and broader market weakness. The sector has also emerged as the biggest sectoral loser, trading with cuts of almost 3%.

Some of the biggest IT stocks in India are trading with huge losses. TCS and Infosys, two of the biggest IT companies, have both fallen more than 3% while others such as Wipro, HCLTech and LTM are also down 2% or more.

ALSO READ: Infosys To TCS: Five Reasons Why IT Sector Is Crashing

Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.