Why is Indian stock market falling today — explained with 5 reasons

Why is Indian share market down today?

On why the Indian share market is going down on Friday, Saurabh Jain, Vice President — Research at SMC Global Securities said, “First and most important reason for the Indian stock market crash is sharp selling in the broad market. Apart from this, weak global market sentiments after the disappointing US PPP data, uncertainty over the interest rate cut ahead of the US Fed meeting, FIIs selling, and rising crude oil prices are some other reasons that have dragged the Indian stock market into red territory.”

Top 5 reasons for Indian stock market crash

1] Sharp sellking in the broad market: “The small-cap and the mid-cap index are under sharp selling pressure due to the stress test trigger. Barring Thursday’s relief rally, investors are again selling heavily in the small-cap and mid-cap segment,” said Sandeep Pandey, Founder of Basav Capital.

2] Weak global sentiments: “After the disappointing US PPP data, the US stock market came under the sell-off stress that further damaged Dalal Street’s mood. This has put doubt into the bulls’ mind as to whether the US economy is resilient or not,” said Avinash Gorakshkar, Head of Research at Profitmart Securities.

The Producer Price Index (PPI) rose 0.6 percent month-on-month in February, showed a labor department report. In the 12 months to February, the PPI rose 1.6 percent.

3] Upcoming US Fed meeting: “After the US Fed chief Jerome Powell’s testimony before the US Congress, the market was expecting a rate cut in the near term but after the disappointing US economic data this week, the US inflation has once again come to the fore. So, there is complete uncertainty about the US Fed’s rate cut decision, which is also a reason for the lack of global trigger providing support to the Indian markets,” said Avinash Gorakshkar.

4] FIIs’ selling: “Due to the heavy selling in the cash segment by the foreign institutional investors (FIIs), selling in the Indian stock market has further intensified. Due to the uncertainty over the US Fed’s rate cut, the US dollar rate has bounced back in recent sessions. The US dollar index has regained the 103 mark and is around 103.50 level. FIIs fishing out money from the equities and moving to the currency market could be one possible reason that has further intensified the Indian stock market crash,” said Saurabh Jain.

FIIs sold out Indian shares worth ₹4,595 crore in the cash segment on Wednesday whereas they sold out stocks worth ₹1,356 crore on Thursday. However, DIIs remained net buyers on both days.

5] Rising crude oil prices: “The MCX crude oil prices have ascended to a 4-month high and the government of India has directed Oil Manufacturing Companies (OMCs) to lower the oil prices. This is expected to fuel inflation in India. So, the market is expecting a cascading effect on the Indian economy after this GoI’s move,” said Saurabh Jain of SMC Global Securities.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 15 Mar 2024, 11:22 AM IST