Indian equity markets witnessed a sharp sell-off on Thursday, March 19, closing over 3% lower on the auspicious occasion of Gudi Padwa. The BSE Sensex plunged 2,497 points, or 3.26%, to settle at 74,207, while the NSE Nifty 50 dropped 776 points, or 3.26%, to end at 23,002. The steep fall resulted in a massive erosion of investor wealth, with nearly ₹12 lakh crore wiped out in a single session amid global uncertainties, rising crude oil prices, and sustained foreign investor selling.
In intraday trade, the Sensex tumbled as much as 2,753 points, or 3.6%, to hit a low of 73,950.95. Similarly, the Nifty 50 slipped 847 points, or 3.5%, to touch 22,930.35. The sell-off was broad-based, with all sectoral indices ending in the red. Nifty Private Bank, Auto, IT, FMCG, and PSU Bank stocks were among the worst hit.
Key Reasons Behind the Fall:
1. Surge in Crude Oil Prices
Crude oil prices spiked sharply amid escalating geopolitical tensions. Brent crude surged to $116.38 per barrel, compared to under $73 before the conflict, raising concerns over inflation and input costs.
2. Escalating US-Iran Conflict
The intensifying conflict between the US and Iran rattled global markets. Iran’s attacks on a key gas facility in Qatar—responsible for supplying nearly one-fifth of the world’s gas—as well as oil refineries in Kuwait, triggered fears of supply disruptions.
3. Weak Global Cues
Global sentiment remained fragile, with Asian markets trading lower and US equities witnessing a sharp overnight decline. The S&P 500 posted its lowest close in nearly four months, further dampening investor confidence.
4. Persistent FII Selling
Foreign Institutional Investors (FIIs) continued their selling streak, offloading Indian equities worth ₹2,714 crore on Wednesday. This marked their 14th consecutive session of net selling, adding pressure on domestic markets.
5. Volatility Spikes
Market volatility surged significantly during the session, with the India VIX jumping over 22%. The sharp rise in the volatility index indicates heightened uncertainty and nervousness among investors, suggesting that market turbulence may persist in the near term.
6. Selloff in HDFC Bank
Index heavyweight, HDFC Bank shares crashed over 8% after the bank announced that its part-time Chairman and independent director Atanu Chakraborty has resigned. HDFC Bank also appointed former HDFC Ltd’s CEO Keki Mistry as interim part-time chairman with approval from RBI.