Why Stock Market Crashed today: Sensex drops 733 points, while Nifty falls below 24,700?
Following U.S. President Donald Trump’s announcement of hefty tariffs of up to 100% on imports of “branded and patented” medications that would take effect on October 1, 2025, Indian benchmark indexes fell on Friday.
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The Nifty50 dropped more than 250 points to go below the 24,650 mark, while the Sensex plummeted more than 800 points intraday to trade below the 80,400 level. However, the broader Nifty ended at 24,654.70, down 236.15 points, or 0.95%, while the 30-stock index ended at 80,426.46, down 733.22, or 0.90%.
The recent market movements have led many to ask, “Why Stock Market Crashed today?” This question is crucial for investors trying to navigate these turbulent waters.
Recently, there was a major decline (or “crash”) in the Indian stock market indices, including the Sensex and Nifty, which prolonged a losing run to many sessions.
Understanding why the stock market crashed today can help investors position themselves better in the future.
The following were the main causes of the decline:
The reasons for today’s decline include several external factors that are crucial to grasp when considering why the stock market crashed today.
1) New U.S. Drug and Other Goods Tariffs:
On October 1, U.S. President Donald Trump declared that “branded and patented” medications would be subject to a 100% tariff, while heavy-duty trucks would be subject to a 25% tariff.
Even though India mainly exports generic (non-patented) medications, this revelation shocked the market, particularly the pharmaceutical industry. Fears that tariffs would eventually be applied to generic medications had a detrimental effect on market mood.
2) Continuous Selling by Foreign Institutional Investors (FIIs):
As investors review their portfolios, they must ask themselves why the stock market crashed today and how they can mitigate risk moving forward.
Significant outflows have resulted from foreign investors’ constant selling of Indian stocks.
The market has been significantly hampered by this ongoing selling pressure.
3) H-1B Visa Fee Increase Issues:
Given that Indian IT companies are among the biggest consumers of H-1B visas, a recent increase in the cost of these visas has had a significant impact on Indian IT equities. This affects the earnings expectation for the sizable IT sector, which contributes significantly to the index as a whole.
The impact of these changes leads many to reflect on why the stock market crashed today, especially in light of global economic conditions.
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4) Declining Expectations for a Rate Cut by the US Federal Reserve:
Hopes for aggressive rate reduction by the Federal Reserve, which typically affects global capital flows and can put pressure on emerging economies like India, have been tempered by better-than-expected U.S. economic data.
These elements worked together to produce a period of widespread selling that had an impact on mid-cap and small-cap equities as well as benchmark indices.
These contributing factors intensify the inquiry into why the stock market crashed today and how it relates to investor sentiment.
Beyond the major reasons (U.S. tariffs on pharmaceuticals, H-1B visa concerns, and FII selling) which are the primary drivers for the sustained sell-off, here are some additional and underlying factors that contributed to the Indian stock market’s decline today and over the last few sessions:
Market analysts are keenly observing these trends to explain why the stock market crashed today and what this means for future trading.
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Weakness in the Rupee (INR):
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The Indian Rupee depreciated significantly against the US Dollar, hitting a new low recently.
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A weaker rupee is often a negative signal for foreign investors (FIIs), contributing to their selling. It also makes imports (like crude oil) more expensive, which can fuel domestic inflation and negatively affect the earnings of import-dependent companies.
Experts recommend staying informed about these factors to better understand why the stock market crashed today and where it might head next.
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Weak Global Market Cues:
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Indian markets often mirror global trends, and several key Asian and U.S. markets also saw declines, creating a bearish environment worldwide.
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This broad-based weakness amplifies selling pressure in the domestic market.
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Worry over Corporate Earnings Recovery:
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Investors are cautious ahead of the upcoming September quarter earnings season. Some market experts have expressed doubts that a meaningful earnings momentum will return quickly.
In summary, the events leading to this downturn prompt a critical analysis of why the stock market crashed today, highlighting the interconnectedness of global markets.
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This uncertainty leads to profit-booking and keeps institutional investors on the sidelines, waiting for clearer signs of growth.
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Negative Sentiment from Global IT Sector:
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The weak guidance and job cuts announced by global IT consulting giants (like Accenture) signalled a sluggish recovery in global tech spending.
Investors are likely to recall the question of why the stock market crashed today as they consider their next moves in this shifting landscape.
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This directly hurt the sentiment for Indian IT stocks, which already had the H-1B visa fee hike hanging over them. Since the IT sector has a large weightage on the benchmark indices, its decline amplified the broader market fall.
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Broad-Based Sell-off in Mid and Small-Caps:
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The decline was not limited to large-cap stocks; the Nifty Mid Cap and Small Cap indices underperformed the main benchmarks, experiencing a more severe sell-off.
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This indicates widespread profit-booking and risk-aversion, suggesting that the “pain” is more acute for the average investor’s portfolio beyond what the main Sensex and Nifty numbers reflect.
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In short, a combination of direct policy-related external shocks (tariffs, visa fees) and deep-seated structural worries (FII outflows, global weakness, and earnings uncertainty) fuelled the current market pessimism.
Ultimately, the combination of these factors has left many wondering why the stock market crashed today, urging a reevaluation of investment strategies.
