BSE-listed firms eroded a total market capitalization of about Rs 9-lakh crore as markets plunge 2%.

The benchmark equity indices Sensex and Nifty tumbled sharply on Thursday, snapping a three-day rally, amid a spike in crude oil prices and weak global cues.

The Sensex plunged 1,953.21 points or 2.54 percent at 74,750.92, while the broader Nifty dropped 580.05 points or 2.43 percent to 23,197.75.

All 16 major sectoral indices on the Nifty traded in the red, with financial and banking stocks declining around 3 percent each, led by heavy selling in HDFC Bank.

Broader markets also remained under pressure, with the Nifty Smallcap100 and Nifty Midcap100 indices falling about 2 percent each.

HDFC Bank, ETERNAL and Shriram Finance were among the major laggards in the Nifty50 pack, declining up to 5 percent, while Oil & Natural Gas Corporation, Reliance Industries and Coal India were the only gainers in the 50-pack index, rising up to 2 perent. Market breadth was negative as about 885 shares advanced, 2549 shares declined and 146 shares unchanged.

Key factors behind market decline

1) Rise in Brent crude prices: Brent crude, the global oil benchmark, surged 3.77 percent to USD 111.4 per barrel. "Brent crude has shot up to USD 111. This is bad news for oil and gas importers like India. If Brent remains above USD 110 for an extended period of time, that will have negative implications for India's macros," V K Vijayakumar, Chief Investment Strategist at Geojit Investments, said.

2) Weak global cues: Asian markets, including South Korea’s Kospi, Japan’s Nikkei 225, Shanghai’s SSE Composite and Hong Kong’s Hang Seng, were trading significantly lower. US markets had ended sharply down on Wednesday.

3) Persistent FII selling: Foreign Institutional Investors (FIIs) continued their selling streak, offloading equities worth Rs 2,714.35 crore on Wednesday.

"Continued FII selling reflects a clear risk-off approach, with sustained capital outflows weighing on market stability," Ponmudi R, CEO of Enrich Money, told PTI.

5) Rise in India Vix: The India VIX, often referred to as the market’s fear gauge, rose more than 16 percent to 21.72 level. A higher VIX generally indicates increased near-term volatility expectations.

6) Hawkish Fed: The US Federal Reserve maintained interest rates but signalled a hawkish stance, citing risks from elevated energy prices. Higher US rates tend to reduce the appeal of emerging markets like India for foreign investors.

US stock benchmarks ended at their lowest levels of 2026 on Wednesday. The Dow Jones Industrial Average plunged over 750 points, while the S&P 500 and Nasdaq Composite fell 1.4 percent and 1.5 percent, respectively.

The US Federal Reserve held its benchmark rate steady and projected higher inflation, with limited scope for rate cuts this year. Fed Chair Jerome Powell said the outlook remains subject to "unusually high uncertainty" amid geopolitical tensions. The central bank also revised its year-end inflation forecast higher, said Devarsh Vakil, Head of Prime Research at HDFC Securities.

7) Sharp selling in HDFC Bank shares: Heavy selling in HDFC Bank shares further dragged markets. Shares of the lender declined up to 9 percent during the session, marking their steepest intraday fall in over two years, following the resignation of its part-time chairman Atanu Chakraborty. The Bank Nifty index was down around 3 percent.

"While the resignation letter does not allege specific misconduct, perception alone can weigh on sentiment until credible steps are outlined and delivered. This could widen the governance risk premium embedded in the shares," Anuj Singla, analyst at JP Morgan, told Reuters.

Technical Outlook

Anand James, Chief Market Strategist at Geojit Investments, said that after a sharp three-day rally of nearly 900 points, signs of exhaustion have emerged near the 10-day simple moving average. A break below 23,111 could signal further weakness, while any recovery would need to sustain above 23,450 to indicate strength, he added.