Sensex falls over 500 points, Nifty below 24,650: Key factors behind market decline

Indian stock markets declined on Friday, with the Sensex falling around 500 points and Nifty50 hovering near the 24,600-mark in the morning. Escalating war between Iran and the Israel-US was among the key factors behind the market decline.

Sensex tumbled more than 500 points to 79,497, while Nifty 50 fell more than 130 points to 24,633, as seen at 9.20 am. This came a day after the benchmark indices rebounded following a multi-session selloff amid rising global geopolitical tensions.

ICICI Bank, IndiGo, L&T, UltraTech Cement, Tata Steel and HDFC Bank shares were the top losers on Sensex, falling 1-2.5%. HCLTech, Infosys, Tech Mahindra, Bharat Electronics (BEL) and Reliance Industries were among the top gainers.

Nifty Private Bank and Nifty PSU Bank were among the top losing sectoral indices on NSE, falling around 1% each, while Nifty IT gained 1.5% to emerge as the top sectoral gainer.

Why is the stock market today? Here are the key factors

1) Iran-Israel war to escalate further?

The war between Iran and Israel-US continued to worsen, with the leaders of the countries threatening more escalations ahead. US Defense Secretary Pete Hegseth has said that the conflict has “only just begun”. US President Donald Trump said yesterday that he has “no time limits” on how long the war can go on.
Officials from the US said that the country has enough munitions to continue bombardment indefinitely in the area. The ongoing war in the oil-rich Middle East had intensified over the weekend after the US and Israel conducted military strikes against Iran, reportedly killing its Supreme Leader, Ayatollah Ali Khamenei. Iran subsequently launched retaliatory attacks across several parts of the oil-rich region. No sign of diplomatic resolution to the war has been spooking global investors this week.

2) Weak global markets

Global markets were mostly in the red after recording a sharp rebound in the previous session. South Korea’s Kospi dropped nearly 2%, while Hong Kong’s Hang Seng rose around 2%, as seen at 9.05 am IST. China’s Shanghai Composite was up 0.25%, while Japan’s Nikkei 225 was trading almost flat, being down 0.01%.
European markets closed in the deep red earlier yesterday, with Germany’s DAX falling nearly 2%, and France’s CAC and the UK’s FTSE 100 being down around 1.5% each.

Wall Street ended the previous session lower, with S&P 500 falling 0.56% and the tech-heavy Nasdaq declining around 0.3%.

3) Bond yield rises

Indian bond yield had climbed sharply earlier this week, tracking the sharp increase in crude oil prices amid escalating geopolitical tensions in the Middle East. Today, the bond yield on the benchmark 10-year government security has increased at 6.65%. As bond yields rise, they make government bonds more attractive than stocks, creating downside potential for markets.

More to come…