Sensex crashes 1,000 points: 5 reasons why stock market is falling today

Benchmark indices came under heavy selling pressure on Thursday, with the Sensex falling more than 1,000 points and the Nifty dropping over 1.5%.The sell-off comes a day after the Reserve Bank of India raised the repo rate and shifted its policy stance towards calibrated tightening, while rising crude oil prices, continued FII selling and a weaker rupee added to the pressure.The Sensex was at 71,605.71 at 1:31 pm, down 1,032.99 points or 1.42%. The index opened at 72,668.00 and touched an intraday low of 71,550.76.The Nifty 50 was at 22,260.85, down 342.20 points or 1.51%. It opened at 22,599.05 and fell to an intraday low of 22,228. The fall was broad-based, with the Nifty 100 down 1.69%, Nifty 200 falling 1.76% and Nifty 500 declining 1.81%. Midcap and smallcap stocks also faced heavy selling, with the Nifty Midcap 50 down 2.21%, Midcap 100 down 2.01% and Smallcap 100 down 2.17%.Here are five key reasons why the stock market is falling today:RBI'S RATE HIKE AND TIGHTER POLICY STANCE The biggest trigger for the market remains the RBI's policy decision on Wednesday.The central bank raised the repo rate by 25 basis points to 5.50% and shifted its stance from “neutral” to “calibrated tightening”. The move came as the RBI flagged risks to inflation from higher oil prices and tighter global monetary conditions.The rate hike itself was widely expected, but the change in stance has raised concerns that the current tightening cycle may not end with Wednesday's increase.The market is now pricing in the possibility of further rate hikes, which could keep pressure on equity valuations and make fixed-income investments more attractive.At the same time, the World Bank has raised its growth outlook for India, underlining the resilience of the domestic economy. But the positive growth outlook is being overshadowed in the market by concerns around inflation, crude oil and monetary tightening.CRUDE OIL JUMPS NEAR $104Oil prices have emerged as another major headwind.Brent crude was at $104.15 a barrel, up 3.94%, while WTI crude rose 3.89% to $91.71.The sharp rise in oil prices is particularly negative for India because the country is a major crude importer. Higher oil prices can push up inflation, increase the import bill, put pressure on the rupee and raise costs for companies.The renewed rise in crude has therefore added to concerns that the RBI may have to maintain a tighter policy for longer.FII SELLING CONTINUESForeign institutional investors have continued to pull money out of Indian equities, putting sustained pressure on large-cap stocks.According to the data provided, FIIs sold Rs 6,121.37 crore in the cash market on Wednesday, after selling Rs 2,961.30 crore on Tuesday and Rs 4,699.14 crore on Monday.They had also sold Rs 9,484.22 crore on October 1, Rs 10,148.41 crore on September 30 and Rs 9,980.22 crore on September 29.That means FIIs have sold around Rs 43,395 crore in the cash market over these six trading sessions.Domestic institutional investors have continued to provide support, buying Rs 4,596.57 crore on Wednesday and Rs 5,088.92 crore on Tuesday. However, DII buying has not been enough to fully absorb the pressure from foreign selling.The persistent FII outflows are particularly hurting large-cap stocks, which have a high weight in the Sensex and Nifty.RUPEE WEAKNESS ADDS TO INVESTOR CONCERNSThe rupee has also come under pressure as high crude prices, foreign fund outflows and elevated US yields weigh on the currency.The rupee was around 96.76 against the US dollar, remaining close to its recent record-low levels.A weaker rupee can further add to imported inflation when crude oil prices are rising. It can also increase costs for companies that depend on imported inputs.The combination of a weak rupee, expensive oil and tighter monetary policy is therefore making investors more cautious.SELLING IS BROAD-BASED ACROSS SECTORSThe market decline is not limited to a few stocks or sectors. Almost every major sector is under pressure.The Nifty Metal index has plunged 3.40%, while Oil & Gas is down 2.60%, Realty 2.68%, Auto 2.01%, Pharma 2.26% and Healthcare 2.31%.Consumer durables have fallen 1.33%, FMCG is down 2.02% and Financial Services 25/50 has declined 1.21%.The broader financial services indices have also fallen, with Financial Services Ex-Bank down 1.62% and MidSmall Financial Services down 1.55%.Among Sensex stocks, ITC has fallen 4.09%, Adani Ports 3.88%, Titan 3.67%, PowerGrid 2.84%, BEL 2.68%, Indigo 2.62% and Reliance 2.56%.Only a handful of stocks are holding up. TCS was up 1.06%, Tech Mahindra 0.87%, Infosys 0.77% and HCLTech 0.65%.GST COUNCIL MEETING ALSO IN FOCUSInvestors are also watching developments from the GST Council meeting, particularly for their potential impact on consumption, businesses and government revenues.With the market already dealing with higher rates, elevated crude prices and weak foreign flows, any measures affecting consumption or corporate costs could become another factor for investors to assess.For now, however, the immediate pressure is coming from the RBI's tighter policy stance, rising oil prices and continued FII selling.The sharp fall comes just a day after the market reacted negatively to the RBI's rate hike and policy shift. The Sensex and Nifty had already been under pressure for several weeks, and Thursday's sell-off shows that investors remain cautious despite the improving domestic growth outlook.The key factors to watch from here will be crude oil prices, FII flows, the rupee, global bond yields and whether the RBI needs to raise rates further.For the Nifty, the 22,200-22,000 zone will now be important after the index slipped towards its recent lows.(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- Ends