Breaking Update: Here’s a clear explanation of the latest developments related to Breaking News:Sensex crashes 1,200 points, investors lose ₹8 lakh crore— Why did the stock market fall? Explained with 5 key factors– What Just Happened and why it matters right now.
The Indian stock market saw a sharp selloff on Thursday, February 19, as investors booked profits across sectors after recent gains.
The Sensex crashed 1,236 points, or 1.48%, to close at 82,498.14, while the Nifty 50 ended at 25,454.35, suffering a loss of 365 points, or 1.41%.
The broad-based selloff impacted second-rung mid- and small-cap indices, as the BSE 150 MidCap Index crashed 1.54% and the BSE 250 SmallCap Index declined 1.16%.
Investors lost about ₹8 lakh crore as the overall market capitalisation of BSE-listed firms dropped to nearly ₹464 lakh crore during the day from ₹472 lakh crore in the previous session.
Why did the stock market fall? 5 key factors
Let’s take a look at five key factors that could be behind the stock market crash on Thursday:
1. Profit booking after recent gains
The domestic market is seeing some profit-taking after recent gains. On Wednesday, the Sensex and the Nifty 50 extended gains for the third consecutive session. With major macro triggers, including the Budget, India-US deal, and RBI policy, behind and the Q3 results season over, the market is witnessing stock-specific action amid a lack of fresh domestic triggers.
2. Fed’s mixed signals weigh on sentiment
The minutes of the US Fed’s January meeting showed that officials are divided on the path ahead. Some of them see scope for further easing if inflation cools, while others are ready to tighten policy should price pressures persist.
A prolonged pause on rate cuts or a US Fed rate hike may strengthen the US dollar, potentially impacting foreign capital inflows into Indian markets, which have seen FII inflows resume in February after seven consecutive months of selloffs in the cash segment.
3. Focus stays on US-Iran
A CNN report on Wednesday claimed that the US military is set to launch a strike on Iran as soon as this weekend. Axios reported that a US attack on Iran would likely be a “massive, weeks-long campaign” resembling full-scale war rather than a limited strike.
The market is closely observing developments surrounding the US-Iran relationship. Experts point out that market participants are taking money off the table, anticipating further escalation in US-Iran tensions over the weekend.
4. An uptick in crude oil prices
An uptick in crude oil prices also influenced sentiment. WTI crude futures rose 4.60% to $65.19 per barrel, while Brent crude futures jumped 4.35% to $70.35 per barrel in the previous session. On Thursday, crude oil extended gains, with Brent Crude rising to $70.53 per barrel and WTI Crude rising to $65.4 per barrel.
Elevated crude oil prices are negative for the Indian economy and its currency, as the country remains one of the largest importers of crude oil globally.
5. Lack of immediate positive triggers
While experts believe the domestic market remains poised for decent upside in calendar year 2026 amid anticipated earnings growth and a healthy macroeconomic backdrop, the market is struggling to extend gains due to a lack of fresh triggers.
Valuations have come down to fair levels for large caps, but remain elevated for mid- and small caps, keeping the market range-bound.
“Nifty is trading at around 20 times FY27 estimated earnings, while the NSE midcap and NSE small-cap indexes are trading at 28 and 24 times estimated FY27 earnings. This makes this market a stock picker’s market,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
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Disclaimer: This story is for educational purposes only. 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.