Why market fell today? Sensex slumps 760 points, Nifty below 24,400 despite ceasefire extension. 7 key reasons

Indian benchmark indices slipped into the deep red on Wednesday, with the Sensex and Nifty dropping nearly 1% each to snap a three-session gaining streak, even after Trump announced an extension to his April 22 ceasefire deadline for the Iran war. This came as a falling rupee, elevated oil prices and other factors kept investors on edge.

The Sensex slumped 757 points to close at 78,516.49, while the Nifty 50 declined 198 points to end the session at 24,378. HCLTech shares were the top losers on the Sensex, crashing 11% after Q4 earnings failed to cheer investors. Other IT stocks, including Infosys, TCS and Tech Mahindra, along with Mahindra & Mahindra (M&M), followed. Bucking the trend, Hindustan Unilever (HUL) and NTPC shares gained over 2% each.

Broader markets, however, outperformed the benchmarks, with the Nifty Midcap 100 and Nifty Smallcap 100 indices rising 0.19% and 1.13%, respectively. Sectorally, the Nifty IT index declined nearly 4% to lead losses as weak results by HCLTech dampened sentiment. Bucking the trend, the Nifty FMCG index gained 0.75%. Around 1,357 stocks declined on the NSE, while 1,923 advanced and 116 remained unchanged.

“The market during this highly volatile and uncertain phase is proving the importance of remaining invested. This month, so far, Nifty is up by 10%. The broader market has outperformed with near 15% returns in BSE 500. The uncanny ability of the market to surprise is evident from this. The surprising up moves in the market may happen from technical factors like short covering which was evident yesterday when the market rallied despite subdued institutional activity,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.

The declaration of indefinite ceasefire by President Trump and Iran’s indifferent and suspect response to it means the uncertainty will continue, the analyst noted, adding that anything can happen any time.

“Meanwhile, investors can focus on the significant trends in the market. Good results from financials are lending support to the segment. Capital market-related stocks are doing well in response to good results. Power related stocks are doing well. IT, following the weak commentary from HCL Tech yesterday is again likely to go into correction mode. Watch out for the results of autos and auto ancillaries, which are likely to be good,” he added.

Here are 7 key factors pushing markets down today.

1) Iran-US war keeps sentiment fragile

US President Donald Trump said that he would indefinitely extend the ceasefire with Iran to allow for further peace talks. In a post on Truth Social, Trump said that his administration, following requests by Pakistani mediators, have agreed to “hold our Attack on the Country of Iran until such time as their leaders and representatives can come up with a unified proposal ... and discussions are concluded, one way or the other."

However, what spooked investors was that Trump announced that he would continue the U.S. Navy's blockade of Iran's trade by sea, considered an act ‌of war by Iran. Notably, this is not the first time Trump has made strong threats and pulled back at the last moment.

Iranian reactions on the ceasefire extension have been cautious to dismissive, with the Islamic Revolutionary Guard Corps-linked Tasnim News Agency rejecting Trump’s claims and warning of forceful resistance to US actions. Iran demands an end to US’ pressure tactics. Additionally, US Vice President JD Vance has delayed travel to Pakistan for the peace talks.

2) Oil prices near $100

Oil prices surged sharply on Wednesday. Brent crude futures were trading at $99.65 per barrel, while WTI crude was hovering near $90.76 per barrel in the afternoon. Notably, this comes after Brent crude sustained near $95 per barrel for the past few sessions on rising peace talk hopes, supporting the bulls on Dalal Street.
Oil prices, however, continue to remain below the crucial $100 per barrel mark, which they had crossed for the first time since March 2022, following Russia’s invasion of Ukraine. This came amid the effective closure of the Strait of Hormuz. The continuation of the naval blockade by the US will likely further impact oil prices.

3) Rupee slides again

The rupee continued to weaken against the US dollar. The Indian currency declined 37 paise to settle at 93.81 against the American greenback in early trade. This came as the dollar strengthened, with Trump’s indefinite extension of a ceasefire lifting the safe-haven currency to a one-week high.

4) FII selling

Foreign investors net sold Indian equities worth Rs 1,918.99 crore on Tuesday, according to provisional data available on NSE. This comes after FIIs remained net buyers of Indian equities for four consecutive sessions, although it is negligible when compared to the massive selloff seen in March following the outbreak of the raging war in the Middle East.

5) Profit booking

Indian benchmark indices are set to snap a three-session gaining streak. Sensex gained around 1,300 points (1.6%) and Nifty rose around 380 points (1.6%) over three consecutive sessions till Tuesday. The sharp gains over these three sessions added more than Rs 8 lakh crore to the total market capitalisation of all companies listed on BSE.

Today’s sharp fall may have been driven by some profit booking after sharp gains, as investors continue to analyse geopolitical developments.

6) IT stocks tumble

The sharp fall in IT stocks also contributed to the decline in the benchmark indices. Shares of HCL Tech crashed 11% after the company’s Q4 results failed to meet expectations. The IT major’s net profit rose 4.3% year-on-year (YoY) to Rs 4,488 crore, while revenue increased 12% YoY to Rs 33,981 crore. The company missed its revenue growth guidance, leading several brokerages to slash target prices and downgrade their ratings on the stock.

The weak sentiment rubbed off on other heavyweight IT stocks as well, leading to a nearly 4% decline in the Nifty IT index.

7) Global markets in red

Global markets mostly remained in the red, as investors questioned the possibility of peace talks in Pakistan actually culminating in a long-lasting agreement between Iran and the US. Hong Kong’s Hang Seng declined nearly 1%. Japan’s Nikkei, South Korea’s Kospi and China’s Shanghai Composite closed in the green with marginal gains.

Wall Street had closed in the red in the previous session, with the S&P 500 and Nasdaq declining around 0.6% each. European markets extended losses, with the UK’s FTSE, France’s CAC and Germany’s DAX falling up to 0.3%.

(With inputs from agencies)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)