Stock Market Crash: Equity benchmark indices, Nifty 50 and BSE Sensex, have fallen more than 2% in the last few trading sessions, with both the indices falling for the fifth consecutive day on Friday. Global trade tensions and concerns over political developments in Washington have hampered investor sentiment, leading to increased caution.In the last five trading sessions, the BSE Sensex has lost more than 2,100 points, falling from a close of 85,762.01 on January 2 to an intraday trough of 83,402.28 on Friday. During the same period, NSE Nifty 50 has fallen below the 25,700 level. Nifty50 ended the day at 25,683.30, down 194 points or 0.75%. BSE Sensex closed at 83,576.24, down 605 points or 0.72%.
Why is the stock market falling?
1. FIIs are selling, The ongoing withdrawal of foreign investors has added to the pressure on equities amid a prolonged decline. Foreign institutional investors sold shares worth Rs 3,367.12 crore on Thursday, January 8, marking the fourth consecutive session of net selling after a brief respite on January 2.Continued outflows of foreign funds have added to the weakness in benchmark indices, deepening losses amid an uncertain global backdrop and strengthening risk-averse sentiment among investors already grappling with adverse external conditions.2. Trump Trade and Tariff Uncertainty: Equity markets remained under pressure after US President Donald Trump indicated that duties on Indian exports may be increased over continued purchases of Russian crude by New Delhi. Trump has approved a new bill proposing 500% tariffs on countries that buy Russian oil.Despite six rounds of discussions since March, the proposed bilateral trade agreement between the two countries remains unresolved. Speaking on the All-In podcast, US Commerce Secretary Howard Lutnick suggested that the talks lost momentum after Prime Minister Narendra Modi did not call Trump. The Trump administration has already imposed tariffs of up to 50% on Indian goods, including a 25% levy on India’s imports of Russian oil, the sharpest tariffs imposed on any trading partner. India has termed these measures as “unfair, unfair and unreasonable”.The uncertainty has intensified ahead of the US Supreme Court’s pending decision on the legality of Trump’s tariff actions. If the court finds the levy unlawful, Washington could be required to return about $150 billion to importers, a decision that would have far-reaching effects on global trade.“After the sharp correction yesterday from the possibility of almost 500% tariffs on India under the provisions of the Russia Sanctions Act approved by President Trump, the market will focus on the decision coming today from the US Supreme Court on the legality of the Trump tariffs,” said Dr. VK Vijayakumar, chief investment strategist at Geojit Investments.Vijayakumar said, “The verdict is very likely to go against Trump. But the details are important: that is, whether it will be a partial cut in tariffs or the tariffs will be completely declared illegal. The market reaction will depend on the details. If the Supreme Court declares the Trump tariffs illegal, there will be a rally in India as India has been worst hit by the 50% tariff.”He said the recent sharp selloff had pushed down even those stocks that were unlikely to be directly impacted by any punitive US measures. According to him, sectors like financials, consumer discretionary and industrials, which have corrected due to broader market weakness, now offer accumulation opportunities for long-term investors.3. Dim Global Signal: Soft signals from foreign markets have strengthened the mood of caution in the Indian stock markets. Shares across Asia fell as investors awaited a key US employment report and prepared for a US Supreme Court decision on the legality of President Donald Trump’s sweeping tariff measures, a decision that could once again destabilize global markets.4. Rising crude oil prices are impacting sentiments: Given the country’s significant dependence on imported crude oil, rising oil prices have added another layer of pressure to Indian markets. Investors are closely monitoring developments in Venezuela after US forces captured President Nicolas Maduro in a high-profile military operation in Caracas over the weekend, sending prices higher amid geopolitical risks.5. Technical signals point to continued weakness: Chart indicators have strengthened the bearish tone, with major benchmarks falling below key support levels during the recent decline.“Technically, the market broke the 20-day SMA (Simple Moving Average) support zone, and after the breakdown, selling pressure intensified,” said Shrikant Chauhan, Head of Equity Research, Kotak Securities, as reported by ET.“On the daily chart, it has formed a long bearish candle, indicating further weakness from the current levels,” Chauhan said. He said, “Our view is that as long as the market is trading below 26,000/84500, the weak sentiment is likely to continue, and the market may slip to 25,750-25,700/84000-83700. On the other hand, if it goes above 26,000/84500, the pullback may continue. 26,075-26,100/84800-85000.,Geojit Investments also turned cautious citing extended technical readings. “Short-term oscillators are oversold, and with the December 30 lows being around, it would not be surprising if an attempt to move higher is made, unless 25878 is penetrated by a much higher margin,” the brokerage said.“Alternatively, the slippage beyond 25776 should be taken as a signal that Nifty is coming out of a sideways trading range that has been in place since November 2025, which prompts us to consider the possibilities of a sharp decline, with the 200 day SMA now deeply situated at 25039.”(Disclaimer: The recommendations and views given by experts on the stock market, other asset classes or personal finance management are their own. These opinions do not represent the views of The Times of India)