Sensex ends 1,700 points down, investors lose ₹9 lakh crore— 5 Key factors behind stock market selloff explained

The Indian stock market suffered strong losses on Friday, March 27, with equity benchmarks — Sensex and Nifty 50 — falling more than 2% each.

Sensex crashed 1,690 points, or 2.25%, to end at 73,583, while Nifty 50 settled at 22,819.60, falling 487 points, or 2.09%. The BSE 150 Midcap index dropped by 2.18%, while the BSE 250 Smallcap index fell 1.82%.

The Sensex and the Nifty 50 extended their weekly losing streak to their fifth consecutive week.

Investors lost about ₹9 lakh crore in a single session as the cumulative market capitalisation of BSE-listed firms dropped to ₹422 lakh crore from ₹431 lakh crore in the previous session.

Why did the stock market fall today?

Here are five key factors behind the stock market selloff today:

1. Weak global cues

Weak global cues seem to be weighing on domestic market sentiment. Major Asian peers such as Korea's Kospi and Japan's Nikkei dropped about half a per cent amid persisting uncertainties over the war in West Asia. Major European indices in the UK, Germany, and France dropped by up to a per cent.

2. Conflicting signals over the West Asian conflict

Mixed reports and conflicting signals related to the war in West Asia are keeping investors wary.

While US President Donald Trump has announced Washington will further delay attacks on Iran’s energy infrastructure until April 6, media reports suggest Israel intends to cripple Iran's military-industrial base and deliver a strong setback before the war ends.

"If the war prolongs, crude remains elevated for months together, and gas availability constraints continue, the stress on India’s macros will be significant, and the market will discount that. In brief, everything boils down to how long the war will last," VK Vijayakumar, Chief Investment Strategist, Geojit Investments, observed.

3. Rupee breaches the 94 per dollar mark

The Indian rupee's weakness further deteriorated market sentiment. According to Bloomberg data, the Indian rupee crashed 87 paise to hit a record low of 94.85 per dollar during the session. Since the onset of the conflict late last month, the rupee has fallen approximately 4%. A weak rupee further leads to foreign capital outflows from the Indian market.

4. Crude oil prices remain elevated

Brent crude prices jumped to $110 per barrel amid conflicting reports over the US-Israeli war against Iran.

“The on and off reaction of the market to news and events regarding the war is likely to continue in the near-term. The spike in Brent crude back to around the $108 level will again trigger another round of risk-off in the Indian market,” Vijayakumar noted.

Experts believe a late correction in crude oil prices will delay India Inc.'s earnings recovery, potentially dragging market returns lower.

Goldman Sachs has lowered India Inc.'s earnings growth forecasts to 8% and 13% for the calendar years 2026 and 2027, respectively. Prior to the West Asia conflict, the financial firm expected earnings growth of 16% in 2026 and 14% in 2027.

5. Foreign capital outflow

As per NSDL, foreign portfolio investors (FPIs) have withdrawn ₹1,23,688 crore from the Indian financial market in March till the 25th, amid a sharp jump in crude oil prices and the rupee's weakness driven by the US-Iran war.

NSDL data showed that FPIs' equity assets fell by $79 billion to $710 billion in the fortnight ended 15 March— the steepest fortnightly decline in at least six years, even exceeding the COVID-19 pandemic-triggered selloff. FPI assets fell $60 billion to $281 billion in the fortnight ended 31 March 2020, amid global lockdowns.

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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.