Why Did Stock Market Crash in the Final Hours of Trade Today?

Indian stock markets witnessed a sharp selloff in the final hours of trading on Friday, with the Sensex tumbling more than 1,000 points and investors losing nearly Rs 5 lakh crore in market value. The late-session decline was driven by concerns over a weak monsoon forecast, continued foreign investor selling, and uncertainty surrounding a potential US-Iran peace agreement.

The BSE Sensex closed 1,092.26 points lower at 74,775.74, while the NSE Nifty50 fell 359 points to settle at 23,547.75. Market volatility also surged, with India VIX jumping around 9% to 16.35.

Weak Monsoon Forecast Triggers Inflation Fears

One of the biggest reasons behind the market crash was the India Meteorological Department's forecast of below-normal rainfall during the June-September monsoon season. TVS Motor Closing Bell Updates: Share Price Dips Amidst Profit-Taking.

The IMD projected rainfall at 90% of the Long Period Average (LPA), raising concerns about food inflation and weaker rural demand. Investors fear that deficient rainfall and possible El Niño conditions could lead to higher prices of agricultural commodities and impact economic growth.

Analysts noted that the weak monsoon outlook sparked broad-based selling across sectors, particularly those linked to consumption and rural demand. Tata Consultancy Services Closing Bell Updates: Shares Slip Amid Contract News.

US-Iran Peace Deal Uncertainty Weighs on Sentiment

Geopolitical concerns also played a major role in Friday's selloff.

While reports suggested that the United States and Iran are close to extending their ceasefire arrangement, the proposed agreement is still awaiting final approval. The lack of confirmation from Washington has kept investors cautious ahead of the weekend.

Market participants remained wary of potential disruptions in global markets if negotiations fail to result in a broader peace deal.

Foreign Investors Continue Selling Indian Stocks

Persistent foreign institutional investor (FII) selling further pressured the market.

According to provisional NSE data, foreign investors sold Indian equities worth over Rs 1,000 crore in the latest trading session. FIIs have remained net sellers during most trading sessions this month, leading to sustained pressure on benchmark indices.

The continued outflow of foreign capital has weakened investor confidence despite healthy corporate earnings.

Which Stocks and Sectors Fell the Most?

Power Grid emerged as the biggest loser on the Sensex, falling more than 4%. IndiGo dropped over 3%, while Bajaj Finance, UltraTech Cement, Tata Steel, Sun Pharma and NTPC lost more than 2% each.

Among sectors, Nifty Oil & Gas declined around 2.5%, while Nifty Metal dropped more than 2%. The broader market also remained under pressure, with the Nifty Smallcap 100 and Nifty Midcap 100 indices falling nearly 1% each.

However, IT stocks showed resilience, with Tech Mahindra and HCLTech gaining close to 2%.

What Could Support the Market Going Forward?

Despite the sharp correction, analysts remain optimistic about the medium-term outlook due to stronger-than-expected quarterly earnings.

Financials, automobiles and metal companies reported robust earnings growth during the latest quarter, while sectors such as defence, capital goods, renewable energy, pharmaceuticals and digital businesses continue to attract long-term investor interest.

Meanwhile, falling crude oil prices may provide some relief. Brent crude slipped below USD 92 per barrel, while WTI crude traded near USD 87 per barrel. The rupee also strengthened against the US dollar, offering additional support to market sentiment.

For now, investors are expected to closely track monsoon developments, global geopolitical events and foreign fund flows for further market direction.

(The above story first appeared on LatestLY on May 29, 2026 05:10 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).