Why stock market crashed today: 4 factors behind BSE Sensex, Nifty50 fall - Rs 10 lakh crore investor wealth gone!

Stock market crash: Indian stock market indices, BSE Sensex and Nifty50, crashed on Friday amid global market turmoiltriggered by growing recession concerns and new tariff declarations from US President Donald Trump. BSE Sensex and Nifty50 plunged over 1%. BSE Sensex closed the day at 75,364.69, down 931 points or 1.22%.Nifty50 ended at 22,904.45, down 346 points or 1.49%.
Widespread selling pressure affected all sector-specific indices negatively, with metal, pharmaceutical and information technology shares experiencing substantial declines.
The BSE Sensex experienced a significant decline resulting in investors losing Rs 10 lakh crore. This widespread sell-off was influenced by weak performance in global markets and increasing concerns about global trade conflicts. Analysts noted that substantial selling of shares in major companies like Reliance Industries, Larsen & Toubro and Infosys, coupled with a significant decrease in global crude prices signalling recession concerns, contributed to the market downturn.
The overall market value of BSE-listed companies decreased by Rs 9,98,379.46 crore, bringing the total market capitalisation to Rs 4,03,34,886.46 crore (USD 4.73 trillion), reflecting the negative sentiment in equity markets.

The following factors contributed to the stock market crash today:
1) Trade War Concerns Following Trump's Tariff Announcement
Donald Trump intensified international trade tensions by implementing a universal 10% baseline tariff on U.S. imports. Nations with substantial trade surpluses face elevated tariffs: India (26%), China (34%), EU (20%), South Korea (25%), Vietnam (46%), Taiwan (32%) and Japan (24%).

"Markets are going through heightened uncertainty which is likely to last some time. A trade war has been triggered by Trump and retaliatory tariffs from China, EU and others are on the cards. This will only extend the period of uncertainty and confusion in the market," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. He indicated that reduced global trade and declining growth would affect India's economy.
Also Read | Is it 26% or 27%? Donald Trump’s reciprocal tariffs on India revised downward to 26% in new White House document
2) Global Markets Tumble Amid Recession Concerns
Sharp declines hit Wall Street, with the S&P 500 shedding $2.4 trillion in value during its most significant daily decline since 2020. The European STOXX 600 index declined 3.2% as trading commenced, following a 2.6% drop the previous day. In Asia, Japan's Nikkei 225 experienced a consecutive decline, falling 2.8% during the overnight session. The market atmosphere turned increasingly cautious, evidenced by investors seeking refuge in U.S.Treasury bonds and gold, highlighting heightened concerns about market stability.
3) Indian Pharmaceutical Industry Faces Tariff Pressures
The pharmaceutical sector in India experienced significant losses after Trump indicated new sector-specific tariffs. Notable companies including Aurobindo Pharma, Laurus Labs, IPCA Laboratories, and Lupin saw declines of up to 7%.
During his Air Force One press interaction, Trump announced: "The pharma is going to be starting to come in at, I think, a level that you haven't really seen before," suggesting imminent trade actions.
He elaborated on the targeted approach: "We are looking at pharma as a separate category. We will be announcing that sometime in the near-future, not in the distant future", suggesting specific measures for the pharmaceutical sector.
The announcement reversed the previous day's gains, when pharmaceutical shares had risen on assumptions of avoiding trade restrictions.
Also Read | Donald Trump announces 26% 'discounted' reciprocal tariff on India: What will be the impact and is Indian economy relatively insulated?
4) Heavyweight stocks drag indices
Market leader Reliance Industries pulled down indices, with significant losses seen across major sectors. Nifty Pharma plunged (-6.2%), whilst Nifty Metal dropped (-5.3%). Other key segments including IT, Auto, Realty, and Oil & Gas witnessed declines ranging from 2-4%.
The widespread selling pressure reflected heightened investor caution, as both global uncertainties and sector-specific challenges weighed on market sentiment.