Why Indian stock market is falling, Are these six reasons responsible?
Indian stock market has been declining for the last several trading sessions. On Monday also Sensex and Nifty opened with gains, but could not maintain it. However, European and other Asian markets are witnessing tremendous growth. On Friday, the US stock market also closed with a good gain. Let us know what is the reason for the fall in the Indian stock market amid the rise in foreign markets.
Exit polls of Haryana and Jammu Kashmir
The exit polls of Haryana and Jammu Kashmir are showing that the ruling BJP at the Center is in a weak position in both the places. It is not in a position to form the government in Jammu and Kashmir. At the same time, in Haryana too, it is likely to lose power after 10 years. This is sending a message to the market that BJP is getting weak. Its effect can be seen on the policy decisions of the central government, which can now be more populist.
Continuously increasing tension between Iran-Israel
The tension between Iran and Israel is not taking the name of reducing. This is likely to have a bad effect on the supply chain along with fluctuations in crude oil prices. India has deep trade relations with both Iran and Israel. Many Indian companies have a lot of business in Israel. In such a situation, the stock market is being affected badly due to increasing geopolitical tensions in the Middle East.
No expectation of interest rate cut from RBI
The US Federal Reserve had made a huge cut of 0.50 percent in the previous interest rates. This had increased the hope that RBI can also give relief to the general public by reducing interest rates. RBI’s monetary policy meeting has also started from today. But, now it is almost certain that the central bank will not cut rates, because its focus will be on reducing inflation for the time being. This has also weakened the overall market sentiment.
Crude oil price reached close to $ 80
India is already grappling with the threat of inflation. There was scope for reduction in petrol and diesel prices due to cheap crude oil. But, due to the current tension in the Middle East, crude oil has again reached close to $ 80. During the last five days, crude prices have risen by about 11 percent. This will affect countries including India and China, which are more dependent on crude oil imports. There will also be a risk of rising inflation here.
Foreign investors’ investment moves towards China
Foreign institutional investors (FIIs) are selling heavily in the Indian stock market. Their eyes are on the Chinese stock market, which has now become very attractive. In fact, recently China’s central bank People’s Bank of China (PBoC) has announced a financial package to rescue the economy from the current crisis. In such a situation, the trend of foreign institutional investors is moving towards China, which is much cheaper than the Indian market.
Sebi’s new rules on F&O spoil the atmosphere
The stock market feels that the new rules related to F&O of market regulator SEBI are not in the interest of investors. There is also a concern about the reduction in trading volume due to these. There is a possibility of reduction in retail participation due to increase in the contract size and limit of weekly expiries. This will also affect the overall market liquidity. Although these rules came a few days ago, the market has not yet fully recovered from its shock.
