Tragic Tuesday: Sensex tanks 1300 pts; Why did stock market crash today?

Business Standard

13-05-2025

Stock market crash: Indian benchmark indices Sensex and Nifty slumped on Tuesday, May 13, 2025. The 30-scrip barometer fell 1,386.21 points or 1.6 per cent, recording an intraday low at 81,043.69 and NSE Nifty tumbled 1.5 per cent or 377.2 points to a day's low at 24,547.5. At close, Sensex was at 81,148.22, down 1281.68 points or 1.55 per cent and Nifty50 was at 24,578.35, down 346.35 points or 1.39 per cent. The steep fall came a day after Indian equities logged the best session in four years. In the previous session on Monday, Sensex zoomed 2975.43 points, or 3.7 per cent, to close at 82,429.90 and Nifty50 closed at 24,924.7, up by 916.7 points, or 3.8 per cent.
Last checked, Infosys, Bharti Airtel, Eternal, HCLTech, Power Grid and TCS were among the top losers on Sensex. In contrast, broader market indices edged higher with BSE Midcap up 0.28 per cen and Smallcap up 0.78 per cent.
Among the sectoral indices, Nifty IT fell the most over 2 per cent a day after marking the sharpest intra-day rally since April 2020. That apart, last checked, Nifty FMCG and Nifty Realty slipped over 1 per cent.
Here are the key reasons behind the market crash on May 13, 2025:
Looming fears around India-Pakistan border tensions
Analysts believe the uncertainty surrounding India-Pakistan tensions continues to loom large. G Chokkalingam, founder of Equinomics Research, notes that investors remain cautious, fearing that any retaliation from Pakistan could further escalate the situation.
Following the horrific Pahalgham terrorist attack, where 27 people were killed. India hit back with ' Operation Sindoor ' which had a series of calibrated punitive actions against Pakistan.
In this operation, the Indian armed forces successfully destroyed nine terror centres operating in Pakistan and Pakistan-occupied Kashmir (PoK).
Fifty-one hours after India and Pakistan reached an 'understanding' to 'stop all firing and military action' with effect from 5 PM on Saturday, the PM addressed the nation to acknowledge and salute the bravery of India's defence forces and the ingenuity of its scientists, and said India proved its 'superiority in new-age warfare', and the 'credibility' of 'made-in-India weapons'. He specifically mentioned that India had 'displayed' its 'capabilities in the deserts and mountains', a reference to the strikes on military sites in the heart of Pakistan.
US-China trade negotiation negative for India
The US and China agreed to a 90-day truce, easing trade tensions. Under the deal, the US will reduce recent tariffs on Chinese imports from 145 per cent to 30 per cent, while China will lower its duties on US goods from 125 per cent to 10 per cent.
This move could be negative for India as China may become a major competitor, according to analysts.
"A successful deal with China is not good for India because if trade relations are normalised between the US and China, then China will start competing with India," said G Chokkalingam.
Institutional activity to remain subdued
VK Vijayakumar, chief investment strategist, Geojit Investments believes the sharp surge in Nifty on Monday was not caused by institutional activity and they are likely to remain subdued in the coming days.
"The combined foreign institutional investor (FII) and domestic institutional investors (DII) buying yesterday was only ₹2,694 crore. This means the market surge was triggered by short-covering and High Net Worth Individual (HNI) plus retail buying," said VK Vijayakumar.
He added: This implies that institutional activity is likely to remain subdued in the coming days which may constrain the continuation of the rally.
Technical view
After a strong 900-point rally, Dalal Street witnessed profit booking, causing the Nifty to slip below 24,700. This pullback was anticipated as the index approached a key resistance zone around 25,080, marked by the R3 Camarilla monthly pivot, according to Jigar S Patel, senior manager - technical research, Anand Rathi Shares and Stock Brokers. He added: Traders often expect selling pressure at such zones, which played out here as profit booking took over, halting the recent upward momentum in the market.