Thursday’s trading session on the Indian stock market turned sharply negative, shaking investor confidence and wiping out nearly ₹2 lakh crore in market value in just one day. The BSE Sensex and NSE Nifty 50, the two major equity benchmarks, experienced strong selling pressure amid a combination of global and domestic issues.
The Sensex plunged by over 1,100 points during intraday trade, while the Nifty 50 fell below the crucial 24,500 level, marking one of the steepest single-day falls in recent weeks. Both indices closed lower, with the Sensex at 80,951.99, down 645 points or 0.79 percent, and the Nifty 50 at 24,609.70, down 204 points or 0.82 percent.
The session started on a weak note as global cues remained negative. The Sensex opened at 81,323.05, lower than its previous close of 81,596.63, and touched an intraday low of 80,489.92, a fall of over 1.4 percent. Similarly, the Nifty 50 opened at 24,733.95 and dropped to a low of 24,462.40, also down 1.4 percent from its last close of 24,813.45.
Although both indices recovered slightly from their day’s lows, the losses remained firm at the end of the trading session. The weakness was more visible in large-cap stocks, as mid-cap and small-cap shares performed slightly better. The BSE Midcap index dropped 0.33 percent, while the BSE Smallcap index managed to register a modest gain of 0.17 percent.
The market sell-off came as a result of several overlapping concerns. The most immediate pressure came from the sharp increase in US bond yields, which caused global investors to reconsider their positions in equities. Long-term US Treasury yields climbed to levels not seen in 18 months, with the 30-year bond yield staying above 5 percent during Asian trading hours.
The bond market reaction came after weak demand was seen in a $16 billion auction of 20-year bonds in the United States. Investors appeared unwilling to commit to US debt at current rates, raising concerns about the long-term health of the US economy.
This growing concern around US debt levels was further fuelled by Moody’s recent credit assessment. The rating agency downgraded its outlook on US credit, citing the country’s rising debt obligations and fiscal deficit. The US is currently managing a debt burden of over $36 trillion, and there are fears that a new tax and spending bill proposed under President Donald Trump could add another $3.8 trillion. Investors worldwide are watching developments in the US Congress closely, as the proposed legislation moves toward a vote. The worry is that more government borrowing could lead to even higher yields, driving capital away from riskier markets such as equities in India and other emerging countries.
Back home, Indian investors were already on edge due to the lack of fresh positive triggers. While the domestic economy has shown resilience in recent months, with inflation under some control and interest rates stable, the corporate earnings season for the fourth quarter of the financial year did not offer much support.
Many sectors reported muted earnings, with particular weakness seen in the consumer goods and information technology sectors. Several IT firms cited weak demand and cautious client spending, while consumer-focused companies struggled with flat sales growth. Even banks, which had shown strong numbers in earlier quarters, reported a slowdown in credit growth, adding to investor caution.
Experts also pointed out that Indian markets had been running ahead of fundamentals in recent weeks. The rally across large-cap, mid-cap, and small-cap segments had pushed valuations to levels that many considered too expensive. The result was a market that was vulnerable to any negative global trigger. Thursday’s fall was, in part, a market correction after weeks of upward momentum. Sameet Chavan, Head of Research at Angel One, remarked that the markets were in an overbought zone, and a pullback was likely. He warned that a sustained drop below recent support levels could trigger further selling pressure, especially if Nifty fails to stay above 24,500.
The external situation also added fuel to the fire. Tensions in the Middle East flared up again, particularly between Iran and Israel. Reports suggested that Israel was considering military action targeting Iran’s nuclear facilities. At the same time, talks between Iran and the United States were also scheduled, creating uncertainty in global markets. Energy prices remained volatile, and investors remained on edge, especially given how quickly such tensions can impact oil markets, inflation, and currency stability.
In addition to all these factors, the broader weakness in global markets continued to weigh on Indian stocks. Most Asian markets were down during Thursday’s trading hours. Japan’s Nikkei dropped 0.7 percent, affected partly by the yen’s appreciation. The Hang Seng index in Hong Kong declined 0.8 percent, while Chinese benchmark indices fell by 0.2 percent. The MSCI Asia-Pacific Index, excluding Japan, was down by 0.5 percent, reflecting broad caution across the region. The US markets had also posted sharp losses in the previous session, with the Dow Jones falling 1.9 percent, the S&P 500 down 1.6 percent, and the Nasdaq slipping 1.4 percent.
In India, the worst-hit stocks were primarily from sectors that are sensitive to global cues or had already posted weak results. Major losers included Mahindra & Mahindra, Bajaj Finserv, Tech Mahindra, Power Grid, ITC, Hindustan Unilever, Reliance Industries, and Maruti. These companies saw selling pressure due to a mix of profit booking, weak earnings outlook, and global risk-off sentiment. On the other hand, a few names like IndusInd Bank, Bharti Airtel, and UltraTech Cement managed to close with gains, but they were exceptions in a market dominated by red screens.
The total market capitalisation of companies listed on the Bombay Stock Exchange fell from ₹441 lakh crore to ₹439 lakh crore, reflecting a one-day loss of ₹2 lakh crore for investors. While such losses are not unusual in times of global uncertainty, they do cause temporary panic, especially among retail investors and smaller participants who may not have long-term strategies in place.
Experts remain divided on the outlook. Some believe that this correction is healthy and could help cool down overheated parts of the market. Others warn that if global uncertainties persist, more downside could be expected. Investors are now waiting for clarity on the US tax and spending bill, the bond yield trajectory, and any further developments in geopolitical hotspots such as the Middle East. Domestic data points such as GDP growth figures, inflation trends, and the Reserve Bank of India’s next policy announcement will also shape the market’s direction in the coming weeks.
While there is no single reason behind Thursday’s crash, the day serves as a reminder of how quickly investor sentiment can shift. Indian markets had been on a strong upward trend, with record highs seen in both the Sensex and the Nifty 50 in recent weeks. However, markets are never immune to global developments, especially in an interconnected world. Rising US yields, growing fiscal concerns in major economies, geopolitical worries, and stretched valuations at home combined to create a day of sharp correction.
