Stock market crash: Market barometers, the BSE Sensex and the Nifty 50, declined for the fourth consecutive session on Tuesday, 12 May, amid mixed global cues.
The 30-share index dropped 1,566 points, or 2%, to an intraday low of 74,449, while the NSE counterpart also fell 2% to the day’s low of 23,348.
Eventually, the Sensex ended 1,456 points, or 1.92%, lower at 74,559.24, while the Nifty 50 ended at 23,379.55, down 436 points, or 1.83%. The Nifty Midcap 150 index tanked 2.53%, while the Nifty Smallcap 250 index plunged 3%.
In these four consecutive sessions, the Sensex has crashed 3,400 points, or 4.4%, while the Nifty 50 has shed 4%.
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The Indian stock market is experiencing a downturn due to several key factors including PM Modi’s austerity call, ongoing US-Iran tensions, high crude oil prices, a weakening rupee, foreign capital outflows, and rising US dollar and bond yields.
The unresolved US-Iran conflict keeps oil prices high, stoking inflation fears and making investors nervous. Uncertainty over peace talks and potential escalations contribute to market volatility and profit-taking.
Sustained high crude oil prices above $100 per barrel erode India’s fiscal strength, hinder economic growth, weaken the rupee, and push retail inflation higher, negatively impacting market sentiment.
Foreign portfolio investors (FPIs) have been consistently selling Indian equities, leading to significant capital outflow. This selling pressure, amounting to billions of dollars, puts downward pressure on the stock market.
While some investors are increasing cash holdings, the decision depends on one’s investment horizon. Some analysts suggest a balanced strategy, looking for ‘buy the dip’ opportunities for long-term investments while hedging short-term risks.
Investors have lost about ₹17 lakh crore during this period, as the overall market capitalisation (m-cap) of BSE-listed firms dropped to ₹456 lakh crore on Tuesday from ₹473 lakh crore on Wednesday, 6 May.
On Tuesday alone, investors lost more than ₹11 lakh crore as the m-cap of BSE-listed firms was ₹467.3 lakh crore on 11 May.
Why did the Indian stock market fall?
Let’s take a look at six key factors behind the fall in the Indian stock market:
1. PM Modi’s austerity call
Prime Minister Narendra Modi’s austerity call has influenced market sentiment. The PM on Sunday urged Indians to use petrol, gas, diesel and such things with great restraint, and to avoid purchasing gold for one year.
On Monday, he renewed his appeal for economic restraint, urging citizens to support the government’s austerity measures.
“The austerity call by the prime minister impacted the stock prices of sectors which are expected to be negatively affected by reduced consumption. Stocks of sectors like jewellery, travel and hotels bore the brunt of selling yesterday. These sectors will bounce back smartly if crude falls sharply and the austerity package becomes irrelevant,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
2. US-Iran episode keeps the market on tenterhooks
The market sentiment has been swinging between hope and despair as the US-Iran conflict remains unresolved.
Despite a ceasefire and several diplomatic efforts, both parties have yet to reach a final peace deal, which is keeping oil prices higher, stoking fears of an inflation flare-up, and keeping investors nervous.
US President Donald Trump rejected the peace talks and warned that the ceasefire with Iran was on a ‘massive life support’, hinting at its end. Tehran also issued a statement saying that it was ready for any aggression.
Every market rise is followed by heavy profit-taking amid lingering uncertainty over a potential US-Iran peace deal.
3. Higher crude oil prices deal a blow
Crude oil benchmark Brent Crude has been above the $100 per barrel mark for over two months now, dealing a blow to domestic market sentiment.
Higher crude oil prices for a prolonged period can erode India’s fiscal strength, derail its economic growth momentum, further weaken the currency, and push retail inflation higher.
4. Rupee’s weakness
The Indian rupee fell to a record low of 95.63 against the US dollar on Tuesday.
The domestic currency, which was near 90 per dollar level at the start of this year, has plunged more than 6% year-to-date, further aggravating foreign capital outflow and keeping the stock market under pressure.
5. Foreign capital outflow
Foreign portfolio investors (FPIs) have been on a relentless selling spree in the Indian stock market.
In the cash segment, FPIs have been selling Indian equities since July last year, cumulatively taking away about ₹4.5 lakh crore during this period. So far in May, they have sold Indian stocks worth ₹19,500 crore.
6. Rising US dollar, bond yields
A sustained rise in the US dollar and 10-year bond yields is also a key reason for the pressure on emerging markets like India.
The US 10-year bond yield, currently 4.42%, has jumped significantly this year. On 31 December 2025, the US 10-year bond yield stood at 4.15%.
A sharp jump in crude oil prices has kept demand for the dollar high, driving its value higher. Plus, elevated oil prices have raised the prospects of higher medium-term inflation, which could lead to tighter monetary policy for a longer period. All these factors together are weighing on market sentiment.
Nifty’s technical outlook
Rupak De, Senior Technical Analyst at LKP Securities, highlighted that the Nifty 50 has further broken away from its recent consolidation range, indicating rising weakness in the trend.
“The RSI continues to remain in a bearish crossover and is trending lower, reflecting sustained negative momentum. Overall sentiment appears extremely bearish, with the potential to drag the index towards 23,200–23,150 in the near term, from where a meaningful recovery might come. On the higher side, resistance is placed at 23600, above which sentiment might improve,” said De.
Sudeep Shah, the head of technical and derivatives research at SBI Securities, said that the 23,530–23,550 zone may act as a crucial resistance for the index.
“As long as Nifty sustains below the 23,550 mark, the prevailing bearish trend is likely to persist, potentially dragging the index lower towards 23,200, with the possibility of further downside extending to the 23,050 level,” said Shah.
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Disclaimer: This story is for educational purposes only and does not constitute investment advice. 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.
