Wibbly wobbly Wednesday for stock market! Sensex, Nifty first soars, and then crashes from day's high - Fall reasons?

The Indian stock market witnessed strong intraday volatility on Wednesday, 21 October, with the benchmarks, the Sensex and the Nifty 50, first soaring higher and then crashing during the session.

The Sensex rose more than 800 points, or 1.12%, to hit an intraday high of 74,682.19, but soon erased all gains to drop to an intraday low of 73,356.71, falling more than 1,300 points, or 1.8%, from the day's high.

Similarly, the NSE barometer Nifty 50 rose 1% to an intraday high of 23,120.90 and crashed 1.8% from the day's high to drop to 22,702.85.

Why is the stock market falling?

Experts highlight three key factors behind the fall in the market:

Oil prices above $110 per barrel

Brent crude prices traded above $110 per barrel, spooking investors. Oil prices rose as escalating tensions in West Asia have raised concerns of supply disruptions. Moreover, dwindling US crude and product inventories are also supporting oil prices.

Higher oil prices are a major negative for India, the world's third-largest oil importer. Prices have been elevated for most of the year now, raising risks of strain on the country's fiscal books.

Profit booking at higher levels

Persistent geopolitical and macroeconomic concerns are prompting investors to book profits when the market rises. Experts pointed out that after a 1% rise early today, market benchmarks declined as investors booked profits across sectors to protect their wealth amid persisting uncertainty.

"With Brent crude prices and US bond yields remaining elevated, the market is likely to remain under pressure. The sell-on-rally market construct will continue in the near term," said V K Vijayakumar, Chief Investment Strategist, Geojit Investments.

FPI selloff

Heavy selling by foreign portfolio investors (FPIs) is another key reason behind the fall in the market. This year so far, FPIs have sold Indian stocks worth ₹3.1 lakh crore.