Sensex Drops 1,800 Points, Nifty Slides 2.3%; Why Is The Stock Market Falling Today?

The Sensex fell 1,800 points, or 2.2%, to an intraday low of 78,443.20, while the Nifty 50 declined over 550 points, or 2.3%, to 24,305.40 on March 4, according to BSE data. Broader markets also weakened, with the BSE midcap and small-cap indices falling more than 2% each.

India VIX rose over 20% to around the 21 level, indicating heightened volatility, as per exchange data.

The total market capitalisation of BSE-listed companies declined to ₹445 lakh crore at around 9:20 am on March 4, compared with ₹457 lakh crore in the previous session, resulting in an erosion of about ₹12 lakh crore within minutes, according to BSE data.

Rupee At Record Low

The Indian rupee fell 66 paise to a record low of ₹92.15 against the U.S. dollar in early trade on March 4, according to Reuters. The dollar index rose to a multi-month high amid rising geopolitical tensions, Reuters reported.

A weaker rupee increases the cost of imports, particularly crude oil, and adds pressure on external balances, according to market data.

Crude Oil Prices Climb

Brent crude traded above $82 per barrel, while WTI crude rose above $75 per barrel on March 4, according to Reuters. The rise comes after U.S. and Israeli forces have been fighting Iran for a long time.

According to Reuters, the conflict has gotten worse since Iran's Supreme Leader Ayatollah Ali Khamenei was killed, with more missile exchanges in West Asia. According to Reuters, U.S. President Donald Trump said on March 3 that the war could end in four to five weeks, but the U.S. was ready for it to last longer.

India imports more than 90% of its crude oil requirements, according to government data. Economists have estimated that every $1 increase in crude oil prices raises India’s import bill by around ₹16,000 crore.

Foreign Investor Outflows

Foreign institutional investors sold ₹6,641 crore worth of Indian equities in the cash segment in February, marking the eighth consecutive month of net selling, according to exchange data. On March 2, FIIs sold equities worth ₹3,295.64 crore in the cash segment.

The decline in benchmark indices reflects pressure from rising oil prices, currency weakness and continued foreign investor outflows amid heightened geopolitical tensions.