Why has stock market crashed today? Experts list out these reasons

The Indian benchmark indices opened in deep red losing more than a percent each. Sensex opened at 59,259.83 down about 600 points from the previous close of 59,806.28 and continued to drop further. 

At 9.45 am, Nifty was at 17,349.50 - down 240.10 points, or 1.37%. Sensex lost 872.17 points, or 1.46%, at 58,934.11.

All Nifty sectoral indices were in the red on Friday morning.

Here are the key reasons leading the fall on the Dalal Street:

Weak Global Cues

In Asia, markets in Hong Kong, Shanghai, Tokyo and Seoul declined following losses in US shares. Hong Kong’s Hang Seng dropped by 2.45 per cent, South Korea’s Kospi by 1.21 per cent, Shanghai by 1.15 per cent, Japan’s Nikkei by 1.36 per cent.

In the US, the S&P 500 tumbled 1.8 per cent, The Dow Jones Industrial Average shed 1.7 per cent and the Nasdaq composite fell 2.1 per cent as investors remain anxious about the prospect of more aggressive action by the Federal Reserve to fight inflation with higher interest rates, reported PTI.

Also read: Why Sensex nosedived 1450 points in two days?

“India's markets have taken a significant hit as a result of weak global cues. The US market was under pressure due to the decline in shares of SVB bank and cryptocurrency financier Silver Capital, particularly in stocks related to banking and finance. We lack direction and are currently under selling pressure at higher levels as a result of the extremely volatile global cues over a long period of time," said Santosh Meena, Head of Research, Swastika Investmart.

"The most recent issue is more US-specific, and there is only an sentimental influence on markets worldwide. Nevertheless, the market may stay volatile in the lead-up to US job data released today and US CPI figures released next week,” he added.

FIIs turn net sellers

As per NSE data, foreign institutional investors (FIIs) buying value stood at ₹7,570.52 crore in Indian equities on Thursday, while the selling value came in at ₹8,132.30 crore. Taking this into consideration, overall FII outflow was at ₹561.78 crore during the day.

Higher US interest rate scenario

US Fed chair Jerome Powell said earlier this week that the central bank could increase key interest rates higher than anticipated earlier. Post the speech, some experts even said rate reaching 6% is also a possibility.

Despite inflation moderating in recent months, the process of getting it back down to two per cent is still a long way away and the path is likely to be bumpy, said Powell.

Read all market stories here

The US central bank's key interest rate is now in a target range of 4.50-4.75%, the highest level in 15 years. It was near zero in the early part of 2022.

All eyes on macroeconomic data

Investors await nonfarm payrolls, the US unemployment rate, and statistics on India's industrial production and manufacturing production will be released.

Technical setup 

On the daily chart, the Nifty on Thursday developed a Bearish Engulfing pattern and further bearishness will be confirmed if the Nifty closes in the red today. Nifty's pivotal levels to watch are support at 17,350 and the 200 EMA at 17,684, said Ameya Ranadive, Equity Research Analyst at Choice Broking.