Summary of this article
Sensex fell 1.67 per cent, while Nifty declined 1.64 per cent
Higher global bond yields and crude oil prices pressured Indian equities
Stronger Fed rate hike bets added to selling pressure across sectors
Stock markets went for a tailspin on September 24 amid a spike in global bond yields, rising crude oil prices and growing bets on a US Federal Reserve rate hike.
At close, the BSE Sensex was down 1,247.71 points, or 1.67 per cent, at 73,580.54, while the NSE Nifty 50 tumbled nearly 383.70 points, or 1.64 per cent, to close at 23,063.10.
The sell-off spread across the broader market, with the Nifty Midcap 100 and Nifty Smallcap 100 declining over 2.25 per cent and 1.53 per cent, respectively. Nifty 500, which represents over 92 per cent of the free-float of NSE-listed stocks, also fell 1.67 per cent, indicating a broad-based sell-off.
India VIX, the market's fear gauge, spiked over 22.61 per cent to 12.69. The India VIX measures the market's expectation of volatility over the next 30 days, with a higher reading indicating greater uncertainty and expectations of sharper price swings.
All sectors came under pressure. Nifty Financial Services Ex Bank Index, which tracks the performance of financial services stocks other than banks, nosedived 4.35 per cent, dragged by PB Fintech and Max Financial Services, which crashed 36 per cent and 9.78 per cent, respectively. Financial and insurance stocks came under heavy selling pressure after the Insurance Regulatory and Development Authority of India (Irdai) released a consultation paper that proposes tighter commissions, lower expense of management (EoM) limits and a ban on "dark patterns" on insurance websites.
The Nifty Private Bank and Nifty Financial Services indices fell over 2 per cent each, while the Nifty Bank and Nifty PSU Bank indices declined 1-2 per cent.
Following financial stocks, Nifty Metal tumbled 1.86 per cent, Nifty Auto fell 1.32 per cent, Nifty Oil & Gas plunged 1.38 per cent. Even the traditionally defensive FMCG sector slipped over 1 per cent.
Why Stock Market Crashed Today
Here are the factors that led to the stock market crash today.
1. Global Bond Yields Spike
A spike in global bond yields spooked stock market investors. The US 10-year Treasury yield spiked to 5.13 per cent, hitting its highest level since 2007. Meanwhile, the Japanese 10-year government bond yields climbed to 3.07 per cent, its highest level in 30 years.
Higher bond yields reduce the appeal of riskier assets, including emerging-market equities, such as India.
2. Crude Oil Prices Rise
Crude oil prices spiked again on September 24 as traders grew concerned over the lack of progress in US-Iran truce talks.
At 4:00 PM, the Brent crude oil futures were higher by 1.46 per cent to $104.60 a barrel, while US West Texas Intermediate (WTI) crude futures quoted up by 1.04 per cent to $93.12.
Oil prices had cooled briefly after US envoy Steve Witkoff and Iranian Foreign Minister Abbas Araghchi held talks on the sidelines of the UN General Assembly to discuss potential peace plans.
Prices have remained elevated since tensions between the US and Iran re-ignited less than a month ago. The energy supply situation worsened after strikes damaged a key Saudi Arabia pipeline.
Iranian President Masoud Pezeshkian recently blamed the US and Israel for fuelling global instability.
“The United States president described us as terrorists. We have been the victims of terrorism,” Pezeshkian said in a live translation of his speech at the United Nations General Assembly.
Adding to supply concerns, the US is reportedly considering a 90-day diesel export ban as domestic fuel prices hit record levels. While the legal framework is yet to be finalised, US President Donald Trump could advance the proposal by the end of the week.
3. Fed Hike Bets Rise
Expectations of a US Federal Reserve rate hike strengthened as officials maintained a hawkish stance amid rising oil prices and inflation risks. Fed Governor Michael Barr said on September 23 that the recent rate hike was aimed at recalibrating borrowing costs, and indicated that further increases may be needed, according to a Reuters report.
The CME FedWatch tool now shows a 73.10 per cent chance of a rate hike at the October 28 meeting, up from 44 per cent a month ago.
Stock Market Outlook: What Should Investors Expect
Market experts expect volatility to remain high in the near term, with the absence of fresh positive triggers keeping investors cautious.
Vinod Nair, head of research at Geojit Investments, said that near-term sentiment could remain subdued without fresh positive cues. He added that this could limit scope for valuation expansion, leaving earnings growth as the key driver of market performance.
Ajit Mishra, senior vice-president of research at Religare Broking, said the ongoing correction could keep volatility elevated. He advised a selective approach to stock-specific opportunities and suggested adding short positions in line with the broader market trend.
