Sensex ends 700 points lower, Nifty 50 ends below 23,850— 5 key factors behind stock market crash explained

Stock market today: The Indian stock market resumed its downward march on Monday, April 13, with the benchmark indices- the Sensex and the Nifty 50- ending about 1% lower.

BSE Sensex crashed 703 points, or 0.91%, to end at 76,847.57, while the NSE benchmark Nifty 50 plunged 208 points, or 0.86%, to settle at 23,842.65.

The mid and small-cap indices also ended lower, but they outperformed the benchmarks. The Nifty Midcap 100 index fell by 0.57%, while the Nifty Smallcap 100 index dropped by 0.46%.

Investors lost about ₹2 lakh crore in a single session as the overall market capitalisation of BSE-listed firms dropped to ₹449 lakh crore from ₹451 lakh crore in the previous session.

Why did the Indian stock market fall?

Let's take a look at five key factors behind the fall in the Indian stock market today:

1. The US-Iran talks fail to yield a positive outcome

The ceasefire talks between the US and Iran over the weekend ended without a deal, which dashed hopes that one of the most pressing issues in global markets in recent history—the US-Iran war—would end with an amicable solution. Adding to the uncertainty, the US plans to blockade the Strait of Hormuz, intensifying fears of a global energy supply shock.

There is much uncertainty about how the situation in West Asia will evolve going forward. At present, the market is concerned that a prolonged war in the region could deal a severe blow to global economic growth this year, and its lasting impact on the economy could lead to subdued market performance in 2026.

2. Trump's tariff threat against China

Media reports suggest US President Donald Trump is back with the tariff rhetoric against China.

Trump on Sunday reportedly targeted China and said that if Beijing supplies weapons to Iran, it would get a 50% tariff.

"I doubt they would do that... but if we catch them doing that, they get a 50% tariff, which is a staggering amount," Fox News quoted Trump as saying.

3. Crude oil prices back above $100 per barrel

Brent Crude prices jumped over 8% to trade near the $103 per barrel, while the US West Texas Intermediate (WTI) crude futures also rallied more than 8% to $105 per barrel after the US-Iran peace talks failed to reach a deal and the US said it will block the Strait of Hormuz, a vital waterway for global crude oil supply.

Crude oil prices have been trading at higher levels for over a month now. Economists say that if prices remain elevated for more than two months, it will be a significant negative for Indian economic growth and increase inflationary risks.

"With the failure of US-Iran peace talks and Trump’s declaration of US naval blockade in the Strait of Hormuz, uncertainty and along with it crude price have spiked. Brent at $103 is emerging as yet another threat to the economy and markets," VK Vijayakumar, Chief Investment Strategist, Geojit Investments, noted.

4. Weak global cues

The Indian stock market mirrored the trend in other major Asian markets. Major Asian indices, including Japan's Nikkei and Korea's Kospi, fell about 1% each, while China's Shanghai Composite ended flat amid concerns over the US-Iran war, keeping sentiment fragile.

Major European market indices, including DAX, FTSE, and CAC, were in the red when the Indian stock market closed.

"How the US naval blockade, which in effect will be a US blockade of Iran’s blockade, will play out remains to be seen. There can be dramatic developments on the geopolitical front, and consequently on markets as well. The ideal strategy in this ultra-uncertain situation is to wait and watch," said Vijayakumar.

5. Rupee falls

According to Bloomberg data, the Indian rupee plunged 65 paise to 93.38 per dollar on Monday. In the previous session, the domestic currency had closed at 92.73. The dollar index climbed about half a per cent, following the jump in crude oil prices.

The week's rupee-strong dollar combo can aggravate foreign capital outflows from the Indian stock market, further dimming the prospects of a recovery in the domestic market.

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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.