Indian equity markets witnessed a sharp sell-off on Monday, with the Sensex and Nifty tumbling over 1% each as a steep decline in global markets, continued foreign institutional investor (FII) outflows and other headwinds weighed heavily on investor sentiment.
Sensex crashed over 800 points to trade below 73,500, while Nifty 50 tumbled over 250 points, slipping below the 23,100 level. Meanwhile, India VIX, which measures volatility in markets, surged nearly 12% to 17.66.
The market rout wiped out over Rs 5 lakh crore from the combined market value of BSE-listed firms, reducing overall market capitalisation to Rs 456 lakh crore.
All Sensex constituents traded in the red amid the bloodbath, with Zudio and Westside-parent Trent dropping nearly 2% to lead losses. M&M, ICICI Bank, Bajaj Finance and Tata Steel also declined 2% each.
The bearish sentiment was broad-based, with Nifty Midcap 100 and Nifty Smallcap 100 indices sinking more than 1% each. All sectoral indices on NSE traded in the red, with Nifty Auto, Nifty IT, Nifty Consumer Durables, Nifty Realty, Nifty Private Bank, Nifty PSU Bank, Nifty Metal and several others dropping over 1% each. Around 2,073 stocks declined on NSE, while 492 advanced and 109 remained unchanged.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said markets are starting the week under significant pressure. He noted that the Nasdaq's 4.18% decline on Friday has unsettled global sentiment, triggering sharp selloffs in technology-heavy markets such as South Korea and Taiwan. Adding to the concerns, escalating tensions in West Asia, with Iran launching missiles at Israel following Israel's strikes in Lebanon, have pushed crude oil prices higher. Vijayakumar also pointed out that stronger-than-expected US jobs data has reduced the likelihood of an early interest rate cut by the US Federal Reserve, despite calls from President Donald Trump for lower rates.
Here are the key factors behind today’s Dalal Street selloff:
South Korea’s Kospi plunged 9% on Monday morning, leading to a 20-minute trading halt, as the massive selloff in tech stocks raged on. The index is now down about 14% from the record high it soared to last week. Japan’s Nikkei, meanwhile, plunged around 4% while Hong Kong’s Hang Seng and China’s Shanghai Composite fell more than 1% each.
Wall Street sharply crashed on Friday, with the tech-heavy Nasdaq tumbling more than 4% to record its biggest single-day fall since April 2025, after a better-than-expected US jobs report raised worries about the Federal Reserve’s higher interest rates.
The Nasdaq Composite index sank around 4.2%, weighed down by a more than 6% crash in Nvidia's share price and a nearly 8% drop in Broadcom shares, whose relatively weak guidance on Wednesday spurred fears that AI demand may not grow as quickly as estimated. The Dow Jones Industrial Average fell 1.4%, while the S&P 500 dropped nearly 3%.
2) Fed rate hike worries
A surprisingly strong US jobs report for April showed employers added 1,72,000 jobs in May - more than double the 80,000 that economists had expected. While a strong jobs market reflects well on the economy, it can also trigger inflation worries and concerns that the Federal Reserve, the American central bank, is less likely to reduce its rates anytime soon.
"We are talking about a strong economy," said Gary Schlossberg, market strategist at Wells Fargo Investment Institute, as quoted by Reuters. "That just adds to inflation risk coming from the Gulf. It makes it difficult for the Fed to even think about rate cuts and might even increase the chances - although we're still not forecasting that yet - of a rate hike by the Fed before the end of the year against the backdrop of inflation,” he said.
A rate hike by the Federal Reserve often triggers worry that the Indian counterpart RBI may follow with a similar move. Additionally, a rate hike by the American central bank puts pressure on the rupee, along with impact on certain sectors including IT.
