Sensex falls 700 points: 3 reasons why the stock market is down today

Stock market came under heavy selling pressure on Wednesday, October 28, with the Sensex falling nearly 800 points and the Nifty slipping below 22,600 as investors reacted to weakness in IT stocks, rising crude oil prices and continued foreign investor outflows.At around 10.50 am, the BSE Sensex was trading at 72,818.40, down 780.27 points or 1.06%. The NSE Nifty 50 stood at 22,556.80, lower by 192.40 points or 0.85%.IT stocks led the decline, with the Nifty IT index falling 3.21%. Infosys dropped 4.66%, Mphasis declined 4.86%, TCS fell 3.02%, Tech Mahindra lost 3.13% and HCLTech slipped 2.63%.The weakness extended to several other sectors. Nifty FMCG was down 1.92%, oil and gas fell 1.99%, while financial services, private banks, metals and realty also traded lower. Pharma and healthcare stocks were among the few pockets of strength. The Nifty Smallcap 100 was marginally higher, while the Nifty Midcap 100 declined 0.31%.Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the market had turned decisively weak, pointing to rising crude prices, geopolitical uncertainty and relentless foreign portfolio investor (FPI) selling as key concerns. Here are the three main reasons why the stock market is falling today.IT STOCKS SLIDE AHEAD OF US FED DECISIONThe sharp fall in IT stocks has been one of the biggest drags on the domestic market, with investors cautious ahead of the US Federal Reserve's policy decision later on Wednesday.The concern centres on the outlook for US interest rates. Investors are watching for signals on whether borrowing costs could remain elevated for longer or whether further rate hikes could be considered if inflation remains persistent. Any indication of tighter monetary policy could weigh on expectations for economic growth and corporate spending in the US.This is particularly important for Indian IT companies because the US is a major market for their technology and consulting services. Their business depends significantly on spending by American companies on software development, cloud migration, digital transformation, artificial intelligence and other technology projects.When borrowing costs rise, companies may become more cautious about expansion and discretionary spending. They could delay technology projects, renegotiate contracts or take longer to approve new deals. This can affect the pace of deal conversion and revenue growth for Indian IT service providers.The market's concern is therefore not limited to the Fed's immediate decision. Its guidance on the future interest-rate trajectory could influence corporate spending plans and the demand outlook for Indian IT companies.The selling was broad-based across the sector in Wednesday's trade. At around 10.50 am, Infosys was down 4.66%, Mphasis had fallen 4.86%, TCS was lower by 3.02%, Tech Mahindra declined 3.13% and HCLTech slipped 2.63%. The Nifty IT index was down 3.21%.The weakness in IT also weighed on the broader market, with the Nifty MidSmall IT and Telecom index down 1.92%.While the Fed decision is a key focus, the early market movement alone does not establish that interest-rate concerns are the sole reason for the sell-off. Global risk aversion and rising crude prices are also contributing to the pressure on equities.CRUDE OIL RISES ABOVE $115 AFTER FRESH ATTACKRising crude oil prices have added another layer of concern for Indian markets. Brent crude was trading at $115.54 per barrel, up 1.46%, while US West Texas Intermediate (WTI) crude rose 1.47% to $101.37.Oil prices opened with a gap-up of around 1.3% after an attack on a Saudi Arabian refinery renewed concerns about possible disruptions to energy supplies. The development has strengthened the supply-risk premium in crude markets amid continuing geopolitical uncertainty in the Middle East.Kaveri More, Commodity Technical Analyst at Choice Broking, said crude prices had moved higher following the attack, with Brent trading around $115.70 per barrel and WTI near $101.10 at the time of her assessment.On the domestic futures market, crude oil was hovering around Rs 9,630 on the Multi Commodity Exchange (MCX), with immediate support placed in the Rs 9,470-Rs 9,340 range, she said.More added that further gains would depend on whether the disruption affects actual production or export flows. Any escalation could sustain the upward momentum, while signs that supply concerns are easing could trigger profit-booking.For India, higher oil prices are a concern because the country depends heavily on imported crude. A prolonged rise in prices can increase the import bill, put pressure on the rupee and raise inflation risks. It can also increase input and transportation costs for businesses, potentially squeezing margins.Higher inflation could make it harder for policymakers to ease monetary conditions, while uncertainty over energy prices can weigh on investor sentiment and economic growth expectations.Dr V K Vijayakumar of Geojit Investments said Brent crude rising above $115 was bad news for the Indian economy and markets. He also referred to reports of possible renewed US strikes on Iran after the US midterm elections, adding to concerns about further escalation in the region.The Nifty oil and gas index was down 1.99% around 10.50 am, reflecting the weakness in the sector as the broader market remained under pressure.FII SELLING CONTINUES; LTCG TAX CHANGES IN FOCUSPersistent selling by foreign portfolio investors is another major concern for the Indian stock market. Foreign outflows can weigh on share prices, particularly when domestic investors are unable to fully absorb the selling pressure.Vijayakumar said two conditions were important for a recovery in Indian equities: crude oil prices needed to decline, and FPIs needed to stop selling and turn buyers.He also raised the possibility of changes to the long-term capital gains (LTCG) tax regime, arguing that sustained foreign investor outflows had begun to hurt India's otherwise strong macroeconomic fundamentals."For the Indian market to revive there are two important conditions now. One, crude prices have to decline. There is no clarity on that. Two, FPIs have to stop their relentless selling and turn buyers," Vijayakumar said.He added: "For this to happen changes in the LTCGs tax appears inevitable now. There is a high probability of this happening since the massive FPI outflows - $19 billion in 2025 and $31 billion so far this year- have started hurting India's otherwise good macros."The figures cited by Vijayakumar underline the scale of foreign investor withdrawals that he believes are weighing on the market. A change in the tax framework, in his view, could be one measure to improve the investment environment and encourage foreign flows to return.However, a change in LTCG tax is an expert's assessment of what may be needed, rather than confirmation that the government will make such a change.(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- Ends