Stock market crash today, May 5: Indian stock markets were back in the red on Tuesday as investor focus shifted to the US-Iran war, rupee weakness, and macro risks. The BSE Sensex index dropped 754 points to hit an intraday low of 76,515, while the Nifty50 slumped 237 to reach 23,882 during the day.
Around 1 PM, the BSE Sensex index was off lows at 76,849 levels, lower by 421 points or 0.54 per cent. Similarly, the Nifty50 index quoted 23,993, down 126 points or 0.52 per cent.
In the broader market, however, the Nifty MidCap index was unchanged, while the Nifty SmallCap index was up 0.29 per cent.
The market breadth was marginally negative with 1,746 stocks trading lower on the NSE as against around 1,405 stocks in the green. Fear index, India VIX, was higher by 0.13 per cent.
Nifty gainers and losers
Eternal was the top laggard on the Nifty index, down 1.7 per cent, at the time of writing this report. This was followed by weakness in shares of ICICI Bank, Coal India, Tech M, ONGC, Dr Reddy’s Labs, Jio Financial Services, HDFC Bank, L&T, and Asian Paints.
Why are markets falling today? Key reasons behind Sensex, Nifty crash on Tuesday, May 5:
US-Iran war to start again?
Fears that the “fragile” ceasefire between the US and Iran could collapse triggered panic selling among investors on Tuesday. The UAE alleged on Monday that Iran launched heavy missile and drone attack against the city, injuring civilians.
UAE’s defence ministry said that UAE’s air defence systems intercepted “12 ballistic missiles, three cruise missiles, and four drones.” Consequently, the UAE decided to restrict its airspace for a week.
In a separate development, South Korea confirmed that one of its vessel — HMM Namu — stuck in the Strait of Hormuz near the UAE, suffered an explosion and fire. However, Seoul government is yet to confirm whether the cause of the explosion was internal or external threat.
Trump threatens to “blow off” Iran
Separately, US President Donald Trump, who launched “Project Freedom” in the Strait of Hormuz to “free” the ships stuck in the region, threatened that Iran will be “blown off the face of the earth” if it attacks US vessels trying to reopen a route through the Hormuz.
Notably, the US military has claimed that it has destroyed six Iranian small boats and intercepted both Iranian cruise missiles and drones in SoH, even as Iran denies the claims.
Brent crude oil holds above $110
Brent oil is holding the $100 per barrel mark as blockade in the Strait of Hormuz continues to disrupt fuel supplies. Besides, the latest attack on United Arab Emirates’ Fujairah oil facility, setting its oil refinery on fire and wounding three Indians, has capped downside in oil prices.
At 1 PM, Brent crude futures were at $114 per barrel, while US WTI oil futures were at $104.4/bbl.
Though the prices are off recent highs, Brent above $100 remains a key macro risk for the Indian economy.
Data suggests that a sustained $10/barrel rise in crude oil price, typically, adds ~35 basis points to India’s CPI (retail) inflation.
While fuel has a modest direct weight (~6-7 per cent), second-round effects, via transport, logistics, and food, amplify the impact. It also increases India’s import bill by ~$15 billion annually, assuming ~4.5–5.0 mbpd imports and normal pass-through.
Rupee hits record low
Indian rupee hits fresh record low on Tuesday, May 5, trading decisively above the 95 per US dollar-mark.
The domestic currency depreciated 23 paise to hit a fresh all-time low of 95.46 against the US dollar today.
According to analysts the rupee is increasingly vulnerable to further selling as dollar index is rising due to safe-haven buying and oil prices staying elevated due to tensions in the Gulf Region. Higher oil prices are expected to keep rupee sold off against the dollar as oil companies and FPIs intensify dollar buying, they said.
“Rising US 10-Year Treasury Yield is compounding INR pressure. Higher US yields improve dollar returns, driving FPI outflows and tightening global liquidity. This strengthens the dollar and compresses India’s yield differential, which is negative for the rupee. At the same time, US-Iran tensions are lifting crude and widening the current account deficit (CAD), reinforcing the pressure,” said Kunal Sodhani, Head-Treasury, Shinhan Bank.
He expects USD/INR to likely hold 93.80 as a base, with 96.20/50 a plausible test over time if external pressures persist.
FII selling hits ₹2 trillion
Persistent pressure on the rupee, which dents dollar returns for foreign investors, has resulted in a record selling by FIIs. Foreign institutional investors have sold Indian stocks worth ₹2.28 trillion in the first four months of 2026, exerting pressure on the markets.
According to a report by PRIME Database, the ownership of NSE companies by FIIs hit a 14-year low of 16.13 per cent as on March 31, 2026 from 16.60 per cent as on December 31, 2025.
Moreover, FPI ownership in NSE 500 companies slipped to an all-time low of 17.1 per cent at the end of FY26.
Nifty’s weekly F&O expiry
The weekly expiry of the Nifty50’s derivative contracts is scheduled to take place later today. As per Axis Securities, the highest Open Interest (OI) on the Call side is at the 24,500 strike, followed by 24,300, which could act as resistance levels.
On the Put side, the highest OI is at 24,000, followed by 23,800 – serving as support levels.
“The premium for the At-the-Money option is ₹518, indicating a likely trading range for the week between 23,600 and 24,700,” it said.
Technical levels to watch
Axis Securities holds a “moderately bearish” view on Nifty and suggests traders to deploy a “Bear Put Spread” strategy to achieve moderate returns.
“The strategy involves buying one lot of the 24,000 strike Put Option, and simultaneously selling one lot of the 23,600 strike Put Option,” it said.
Kotak Securities, meanwhile, thinks the market may remain non-directional in the short-term.
“For day traders, the 24,000 level on the Nifty and 77,000 on the Sensex will act as key support zones. Above these levels, the market could continue its positive momentum towards 24,300–24,400/77,700–78,000. On the flip side, a fall below 20-day SMA or 24,000 could take the Nifty to 23,800. Moreover, a close below 23,800/77,000 could trigger further weakness to 23,500/76,100,” said Shrikant Chouhan, head of equity research, Kotak Securities.
