Sensex crashes 1,236 points, investors lose ₹8 lakh crore— Why did the stock market fall? Explained with 5 key factors

The Sensex crashed 1,236 points, while the Nifty 50 ended at 25,454.35. 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.

The Indian stock market saw a sharp selloff on Thursday, February 19, as investors booked profits across sectors after recent gains.

Sensex crashed as much as 1,470 points in intraday trade, while the Nifty 50 hit an intraday low of 25,388.75 during the session. Even though the indices pared some losses, they ended with deep losses.

The 30-pack Sensex ended the session 1,236 points, or 1.48%, lower at 82,498.14, while its 50-stock counterpart, the Nifty 50, settled the day at 25,454.35, suffering a loss of 365 points, or 1.41%.

The broad-based selloff also 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 us 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 only resumed 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.