The decline in the stock market is not stopping. After excellent GDP, GST collection figures also failed to excite the market. Strong selling pressure was seen on the first day of the trading week, Bombay Stock Exchange (BSE) 30-share sensitive index Sensex fell by 383 points, while National Stock Exchange (NSE) Nifty 50 index fell and closed at the level of 23,779. Due to this fall, investors lost about Rs 3 lakh crore.
Pressure on IT and tech sector
Due to slowdown in the US economy and weak outlook of IT giants, there was all-round selling in IT stocks. The fall in big names like Infosys and Tech Mahindra worked to drag the indices down.
Due to increasing tension between America and Iran and uncertainty in the Middle East, the prices of crude oil (Brent Crude) are continuously strengthening. Crude oil inflation has a direct impact on the economy and margins of companies in oil importing countries like India.
Despite sharp selling in the market, some large cap stocks braved the fall and closed in the green. Larsen & Toubro (L&T), Bharti Airtel and Maruti Suzuki closed in the green. Whereas the selling was most dominated by metal and IT giants like Infosys, Tech Mahindra and Tata Steel. Profit booking also dominated in the smallcap and midcap segments, which affected the portfolios of retail investors.
Market experts believe that until Nifty again stands firmly above the psychological level of 24,000, the market may continue to fluctuate. Because on Monday the market closed below 23,800, which indicates selling. In the coming sessions, investors will keep an eye on the statements of the US Federal Reserve, international movement of crude oil and FII data.
There are 4 main reasons for the decline in the stock market:
Rise in crude oil prices
There was a rise in the prices of crude oil (WTI/Brent) in the international market. The price of crude has reached $97 per barrel. India imports a large part of its needs, which affects the country’s trade deficit and inflation.
Fear of increase in interest rates in America
Due to increasing uncertainty regarding US economic data and the monetary policy of the Federal Reserve, investors remained afraid that US interest rates may remain high for a long time.
Tension deepens between America and Iran
The increasing military and political tension between the US and Iran in the Middle East has increased risk aversion in global markets and created an environment of uncertainty.
Continuous selling by foreign institutional investors (FIIs)
Due to the strength in US bond yields and dollar index, foreign investors continuously withdrew capital from the Indian equity market, which created huge pressure on domestic indices.
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