Mayhem on D-Street: Sensex Nosedives 1,000 Points, Nifty Crashes Below 24,850 in Broad Selloff

Mumbai, 12 June 2025: Indian equity markets witnessed a sharp and broad-based decline on Thursday, June 12, with benchmark indices posting deep losses. The BSE Sensex plummeted nearly 1,000 points, while the NSE Nifty 50 tumbled below the psychological 24,850 mark during the day.

Opening and Intraday Trends

The Sensex opened at 82,571.67, slightly higher than its previous close of 82,515.14. However, selling pressure soon intensified, dragging the index down by 992 points, or 1.2%, to touch an intraday low of 81,523.16.

The Nifty 50 began trading at 25,164.45 against its prior close of 25,141.40 and fell steeply by 1.3% to hit a session low of 24,825.90.

Closing Figures

By the end of the trading session, the Sensex had shed 823 points, or 1%, closing at 81,691.98. The Nifty 50 ended 253 points lower, or 1.01%, at 24,888.20.

Broader markets also took a beating—BSE Midcap index declined by 1.52% and the Smallcap index lost 1.38%.

Investor Wealth Takes a ₹7 Lakh Crore notional Hit

The overall market capitalisation of BSE-listed companies slipped to around ₹449 lakh crore, from ₹456 lakh crore in the prior session. The day’s erosion wiped off nearly ₹7 lakh crore of investor wealth in a single trading session in notional terms.

Why Did the Stock Market Crash Today?

Analysts attributed the market selloff to the following five key factors:

1. Intensifying Geopolitical Unrest in the Middle East

Worsening Middle East tensions dented sentiment across global markets. Asian and European indices also declined on news of growing strains between the United States and Iran.

Reports indicated that the US government began withdrawing non-essential personnel from the Middle East amid breakdowns in nuclear negotiations. Statements from the US State Department and military sources, cited by The Times of Israel, confirmed the move.

Adding fuel to the fire, speculation mounted around a possible Israeli strike targeting Iran’s nuclear facilities. US President Donald Trump doubled down on his stance, affirming that Iran would not be allowed to acquire nuclear weapons.

2. Lukewarm US-China Trade Developments

The US-China trade negotiations did little to lift market morale. Investors had hoped for a more robust agreement but were left underwhelmed.

President Trump announced China’s commitment to supply rare-earth minerals and magnets to the US and confirmed the continuation of Chinese student admissions into American universities. However, the final agreement is pending formal approval from both Trump and Chinese President Xi Jinping.

Trump posted on Truth Social: “Our deal with China is done, subject to final approval with President Xi and me… We are getting a total of 55% tariffs, and China is getting 10%… The relationship is excellent!”

Market veterans, however, remain cautious. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, remarked: “China has yet to confirm anything officially. Given Trump’s history, it would be premature to view this as a clear positive.”

3. Fears of Global Economic Slowdown Escalate

Concerns over a potential economic slowdown—particularly in the US—have weighed on global investor confidence.

The World Bank, in its updated forecast released Tuesday, warned that the US’s aggressive tariff policies could lead to a broader slowdown. Revised global growth expectations now stand at 2.3% for 2025 (0.4 percentage points down from January), 2.4% for 2026 (down 0.3 points), and 2.6% for 2027.

Vijayakumar commented: “Trump’s tariff plans could spread further, as he plans to issue letters to trade partners about standardised tariffs. The markets will await clarity.”

4. Fed Rate Cuts May Be Pushed Further

Despite a softer-than-expected May CPI print in the US, analysts believe the Federal Reserve may adopt a cautious stance due to prevailing tariff-related uncertainty. This could delay the much-anticipated interest rate cuts.

Pranay Aggarwal, Director & CEO of Stoxkart, said: “The market rout was driven by a mix of global headwinds—chiefly sticky US inflation and rising doubts over Fed rate cuts.”

The Federal Open Market Committee (FOMC) is set to meet on June 17–18.

Madhavi Arora, Chief Economist at Emkay Global, stated: “The market still expects two rate cuts in 2025. The odds for a June cut are nil; the next cut may come by October. The tariff impact might reflect in inflation or margins only after a few months. Until then, the Fed will likely stay on pause.”

5. Stretched Indian Market Valuations Trigger Profit-Booking

High valuations in the Indian equity space have kept investors on edge, leading to sporadic bouts of profit-taking.

Currently, the Nifty 50’s P/E ratio stands at 22.60—above its 12-month average of 22.19—and inching close to its 6-month peak of 22.80.

With limited domestic triggers and elevated valuations, both institutional and retail investors appear to be adopting a cautious stance.

Conclusion

Thursday’s steep market decline was the result of an interplay of international and domestic concerns—from geopolitical crises and trade deal doubts to valuation worries and delayed monetary easing hopes. As investors brace for upcoming Fed decisions and developments in global trade, near-term volatility may persist.

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