Sensex crashes 850 points, investors lose ₹5 lakh crore; why is the Indian stock market falling? EXPLAINED

Mint

a day ago

The Indian stock market suffered strong losses across segments on Thursday, June 12. The Sensex fell over 850 points, and the Nifty 50 dropped below 24,900 during the session. The mid and small-cap indices fell over 1 per cent each.
The Sensex opened at 82,571.67 against its previous close of 82,515.14 and plunged 853 points, or 1 per cent, to an intraday low of 81,661.68. The Nifty 50 opened at 25,164.45 against its previous close of 25,141.40 and crashed 1 per cent to an intraday low of 24,871.
The overall market capitalisation of firms listed on the BSE dropped to nearly ₹ 451 lakh crore from about ₹ 456 lakh crore in the previous session, making investors poorer by about ₹ 5 lakh crore in a single session.
Experts point out the following five factors behind the selloff in the Indian stock market:
Rising tensions in the Middle East weighed on markets globally. Major Asian and European markets suffered significant losses during the session on signs of rising tensions between the US and Iran.
The US is pulling out non-essential personnel from the Middle East due to rising regional tensions as nuclear negotiations continue to break down, according to statements from the US State Department and the military reported by The Times of Israel on Wednesday.
Speculations are rife that Israeli forces would carry out an attack against Iran's nuclear program. Meanwhile, US President Donald Trump has reiterated that the US won't allow Iran to have a nuclear weapon.
The US-China trade deal has failed to boost market sentiment as investors hoped for a more sweeping deal.
Trump announced on Wednesday that China will supply the US with rare-earth minerals and magnets and that the US administration will allow Chinese students into US universities. However, Trump and his Chinese counterpart still need to agree on the deal.
'Our deal with China is done, subject to final approval with President Xi and me. Full magnets and any necessary rare earths will be supplied, up front, by China. Likewise, we will provide to China what was agreed to, including Chinese students using our colleges and universities (which has always been good with me!). We are getting a total of 55% tariffs, and China is getting 10%. The relationship is excellent! Thank you for your attention to this matter!' Trump wrote on Truth Social.
"There are reports of a possible agreement between the US and China. But the Chinese haven't officially confirmed anything. President Trump is talking about a 55 per cent tariff on China and a 10 per cent tariff on the US. Trump's credibility being what it is, it would be too early to discount this as positive for markets," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
(This is a developing story. Please check back for fresh updates.)