Why Is Stock Market Falling Today? Key Factors Behind Sensex, Nifty Decline On February 02

Last Updated:March 02, 2026, 14:37 IST The Indian equity market witnessed a strong selloff in early trade on Monday, March 2, as escalating geopolitical tensions in West Asia Stock market crash: The Indian equity market witnessed a strong selloff in early trade on Monday, March 2, as escalating geopolitical tensions in West Asia weighed on already cautious sentiment amid foreign capital outflows, uncertainty over global developments, and a relatively muted earnings outlook. At 01:57 pm, the Sensex tumbled over 1,800 points, slipping below the 79,500 level; meanwhile, Nifty dropped below the 24,650 level. Within the first few minutes of trading, investors lost more than Rs 8 lakh crore as the combined market capitalisation of BSE-listed companies fell to about Rs 455 lakh crore from Rs 463.50 lakh crore in the previous session. Analysts said the selloff was driven by five key factors. Commodity and currency pressures were also amplified by geopolitical uncertainty. Crude oil price volatility could widen India’s current account deficit, put pressure on the rupee, and increase inflationary risks. Market analysts noted that the duration of the West Asia conflict will be a crucial determinant of medium-term market direction. According to V K Vijayakumar, Chief Investment Strategist at Geojit Investment, global oil producers such as members of OPEC Plus may attempt to stabilise prices by increasing output, though a closure or disruption around the Strait of Hormuz could push crude prices further upward and intensify market instability. US-Iran war jitters First, war jitters following the escalation of conflict between the United States and Iran in West Asia, after joint US-Israel military strikes reportedly killed Iran’s Supreme Leader Ayatollah Ali Khamenei and other senior officials, prompting Iranian missile retaliation across the region. US President Donald Trump warned of strong military retaliation, stating that the US would “avenge" the deaths of American servicemen. Crude jumps to multi-month high Second, global crude oil prices surged to multi-month highs amid fears of supply disruption, particularly around the strategic Strait of Hormuz. Brent crude futures jumped more than 8% during Monday’s session, briefly crossing $82 per barrel before easing near $78, while West Texas Intermediate crude traded around $75 per barrel. In over-the-counter trade on Sunday, Brent crude had already surged about 10% to near $80 per barrel. Economists warned that every $10 per barrel increase in crude prices could add roughly Rs 10,000–Rs 15,000 crore annually to India’s import bill, given that the country imports about 85% of its oil requirements. Rupee breaches 91 mark Third, the Indian rupee weakened past the 91 per US dollar level for the first time in a month. According to Bloomberg data, the currency depreciated by 28 paise to 91.26 per dollar amid rising oil prices and global risk aversion. Market experts expect the Reserve Bank of India to intervene to prevent a sharp depreciation. Senior research analyst Jigar Trivedi of IndusInd Securities said the rupee could weaken beyond 91.30 per dollar following the Middle East escalation, though central bank action may limit downside risk. FIIs Fourth, foreign institutional investors resumed net selling of Indian equities. Foreign institutional investors sold stocks worth Rs 11,002 crore in February in the cash segment, marking the eighth consecutive month of net equity outflows from Indian markets. Persistent foreign selling pressure has been a key factor behind recent market volatility. Fifth, domestic corporate earnings have remained uneven, with several sectors reporting cautious guidance, further dampening investor sentiment. News business markets Why Is Stock Market Falling Today? Key Factors Behind Sensex, Nifty Decline On February 02