Stock market crash: Market barometers, the BSE Sensex and the Nifty 50, declined for the fourth consecutive session on Tuesday, 12 May, amid mixed global cues.
The 30-share index dropped 900 points, or more than 1%, to an intraday low of 75,122, while the NSE counterpart fell 1% to the day’s low of 23,578.
In these four consecutive sessions, the Sensex has crashed more than 2,800 points, 3.6%, while the Nifty 50 has shed 3%.
Investors have lost about ₹11 lakh crore during this period, as the overall market capitalisation of BSE-listed firms dropped to ₹462 lakh crore in morning deals on Tuesday from ₹473 lakh crore on Wednesday, 6 May.
Why is the Indian stock market falling?
Let’s take a look at five key factors behind the fall in the Indian stock market:
1. US-Iran episode keeps the market on tenterhooks
The market sentiment has been swinging between hope and despair as the US-Iran conflict remains unresolved.
Despite a ceasefire and several diplomatic efforts, both parties have yet to reach a final peace deal, which is keeping oil prices higher, stoking fears of an inflation flare-up, and keeping investors nervous.
US President Donald Trump rejected the peace talks and warned that the ceasefire with Iran was on a ‘massive life support’, hinting at its end. Tehran also issued a statement saying that it was ready for any aggression.
Every market rise is followed by heavy profit-taking amid lingering uncertainty over a potential US-Iran peace deal.
2. Higher crude oil prices deal a blow
Crude oil benchmark Brent Crude has been above the $100 per barrel mark for over two months now, dealing a blow to domestic market sentiment.
Higher crude oil prices for a prolonged period can erode India’s fiscal strength, derail its economic growth momentum, further weaken the currency, and push retail inflation higher.
3. Rupee’s weakness
The Indian rupee dropped 35 paise to hit a record low of 95.63 against the US dollar on Tuesday amid a rise in crude oil prices and foreign capital outflow.
The domestic currency, which was near 90 per dollar level at the start of this year, has plunged more than 6% year-to-date, further aggravating foreign capital outflow and keeping the stock market under pressure.
4. Foreign capital outflow
Foreign portfolio investors (FPIs) have been on a relentless selling spree in the Indian stock market.
In the cash segment, FPIs have been selling Indian equities since July last year, cumulatively taking away about ₹4.5 lakh crore during this period. So far in May, they have sold Indian stocks worth ₹19,500 crore.
5. Rising US dollar, bond yields
A sustained rise in the US dollar and 10-year bond yields is also a key reason for the pressure on emerging markets like India.
The US 10-year bond yield, currently 4.42%, has jumped significantly this year. On 31 December 2025, the US 10-year bond yield stood at 4.15%.
A sharp jump in crude oil prices has kept demand for the dollar high, driving its value higher. Plus, elevated oil prices have raised the prospects of higher medium-term inflation, which could lead to tighter monetary policy for a longer period. All these factors together are weighing on market sentiment.
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Disclaimer: This story is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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