The Indian stock market is a dynamic entity influenced by a wide range of factors. When it experiences a downturn, it is critical to understand the causes. The Indian stock market’s current decline can be attributed to a variety of factors, including global economic trends, domestic issues, and market sentiment. Let’s get into these details Why Indian Stock Market is Falling Today.
Why is the Indian Stock Market Falling Today?
The primary cause of the Friday decline in the Indian stock market, according to Saurabh Jain, Vice President of research at SMC Global Securities, is “sharp selling in the broad market.” In addition, the Indian stock market has entered negative territory due to several factors, including FII sales, rising crude oil prices, uncertain interest rate cuts ahead of the US Fed meeting, and poor global market sentiment following the disappointing US PPP data.”
Top 5 Reasons Why Indian Stock Market is Falling Today
- Sharp selling in the broad market: The stress test trigger has put significant selling pressure on the small-cap and mid-cap indexes. Investors are once more selling heavily in the small- and mid-cap segments, barring Thursday’s relief rally, according to Sandeep Pandey, Founder of Basav Capital.
- Weak global sentiments: The US stock market experienced a sell-off stress following the unsatisfactory US PPP data, which further soured Dalal Street’s sentiment. The US economy’s resilience has been called into question by this, according to Profitmart Securities Head of Research Avinash Gorakshkar. According to a labour department report, the Producer Price Index (PPI) increased by 0.6 percent in February over the previous month. The PPI grew by 1.6 percent in the year ending in February.
- Upcoming US Fed meeting: The market had anticipated a rate cut shortly following US Fed Chairman Jerome Powell’s testimony before Congress, but this week’s dismal US economic data has brought US inflation back to the forefront. Thus, there is total uncertainty surrounding the US Fed’s decision to cut interest rates, which also explains why there isn’t a global catalyst supporting the Indian markets, according to Avinash Gorakshkar.
- FIIs’ selling: The foreign institutional investors (FIIs) heavy selling in the cash segment has led to an even greater escalation of selling in the Indian stock market. In recent sessions, the US dollar rate has recovered because of the uncertainty surrounding the US Fed’s rate cut. The US dollar index is currently hovering around 103.50 after regaining the 103 mark. The Indian stock market crash may have gotten worse because FIIs were taking money out of equities and transferring it to the currency market, according to Saurabh Jain. On Wednesday, FIIs sold out Indian shares valued at ₹4,595 crore in the cash segment, and on Thursday, they sold out stocks valued at ₹1,356 crore. DIIs, however, continued to be net buyers on both days.
- Rising crude oil prices: The government of India has ordered Oil Manufacturing Companies (OMCs) to reduce oil prices after the MCX crude oil price reached a 4-month high. This will likely contribute to India’s inflation. According to Saurabh Jain of SMC Global Securities, “the market is anticipating a cascading effect on the Indian economy following this GoI’s move.”
How much have stock markets lost in three sessions?
The BSE Sensex dropped about 2,200 points, the Bank Nifty index dropped 2,700 points, and the Nifty 50 index plummeted almost 650 points in the previous three sessions. The mid-cap index has increased by about 0.40 percent, while the small-cap index has increased by about one percent. One of the reasons for the stock market’s decline is the escalating tension in the Middle East as a result of the Israel-Iran conflict, which has created geopolitical uncertainty in the area.
How are global markets doing?
As the US stock market finished lower on Friday, there was widespread selling on international exchanges, and on Monday, Asian markets like the Nikkei, Hang Seng, and Kospi saw heavy trading.
FAQ of Why Indian Stock Market is Falling Today
Q1. ‘Basic Services Demat Account’ (BSDA): What is it?
Ans. A specialized demat account created just for individual investors is called a BSDA.
Q2. Can someone from overseas access my demat account?
Ans. Yes, as long as you have an internet connection and the required login information, you can usually access your Demat account from anywhere in the world.
Q3. If I don’t regularly check my demat account, what will happen to it?
Ans. Your Demat account may be frozen by your depository participant if there is a prolonged period of inactivity. You’ll have to go through the e-KYC procedure once more to reactivate it.
