The Indian stock market continued its selling trend on Tuesday for the third consecutive session as a result of the Iran-Israel confrontation in Gaza, which is escalating tensions in the Middle East, rising US dollar rates and the US Treasury yield, and FII selling. The Nifty 50 Index fell over 650 points over the course of the past three days, opening lower at 22,125 and reaching an intraday low of 22,103. The BSE Sensex had a lower opening today at 72,892 and closed the day at 72,814, recording about 2,184 points in the final sessions.

Similarly, the Bank Nifty began at 47,436 today and, within minutes after the stock market opening bell, touched today's low of 47,316, marking a 2,670 point decline from last Thursday's finish.

Today's stock market meltdown

The BSE Sensex has dropped almost 2,200 points in the previous three days, the Bank Nifty index has plummeted to the tune of 2,700 points, and the Nifty 50 index has plummeted roughly 650 points. Nonetheless, during Tuesday's early morning session, there are indications of bottom fishing in the overall market. While the mid-cap index is up around 0.40 percent, the small-cap index is up about one percent.

Why is today's share market down?

Avinash Gorakshkar, Head of Research at Profitmart Securities, explained why the Indian stock market was down today: "The main cause of the decline in the Indian markets is the escalating tension in the Middle East as a result of the Israel-Iran war." But there are other factors that have contributed to the selling pressure in the Indian stock market, such as the strengthening US currency and Treasury rates, selling by FIIs, a declining value of the Indian National Rupee (INR), and rising crude oil prices."

Experts identified the following five main causes for the decline in the Indian stock market:

1. Iran-Israel war: According to Avinash Gorakshkar, "the main reason for selling in the Indian equity market is tension in the Middle East as this has put doubts regarding the geo-political uncertainty in the region."

2. Weal global market: "Selling has occurred on all international bourses following an escalation in the Middle East. On Friday, the US stock market saw a decline. Major Asian markets, including the Nikkei, Hang Seng, Kospi, and others, are trading under pressure during Monday's early morning session, according to Sandeep Pandey, the founder of Basav Capital.

3. Increase in US dollar rates: "The US dollar is steadily increasing; the US dollar index is almost at 106 points, and the US dollar rate versus the Japanese yen has reached a 34-year high." According to Profitmart Securities' Avinash Gorakshkar, "this has spurred the US Treasury yields, which has spurred selling in the global equity market, which includes the Indian stock market."

4. Soaring prices for crude oil: "In both domestic and foreign markets, the price of crude oil has risen to a six-month high." The price of fuel increased by 6% in March 2024, but it has since increased by more than 3%, according to Anuj Gupta, Head of Commodities & Currency at HDFC Securities.

Sandeep Pandey of Basav Capital stated, "Soaring crude oil prices are not a good sign for the global economy as it is expected to put pressure on the local currency and inflation."

5. Disappointing US retail sales: "The market is expecting that US expenditure is still strong and it may fuel inflation, but the US retail sales numbers are hotter than expected." Accordingly, the market thinks that the US Fed's chances of cutting rates in the near future may be harmed by such dismal retail sales data. Avinash Gorakshkar stated that "US dollar rates and US Treasury yields have increased due to this buzz on US Fed interest rates as equity investors are switching positions from equity to these assets."