Why Share Market Is Falling: Indian stock market will not rise in Diwali week! Know the reason here

Why Share Market Is Falling: For the last few days, the Indian stock market has been witnessing a continuous decline. Even in the Diwali week, the situation of the Indian market is not expected to be different from the last few weeks. Because the factors affecting the market remain the same. There is uncertainty about the US stock market and it will remain till the results of the US presidential election are out.

Why the weak financial performance of Indian companies in the second quarter?

The performance of companies listed in the Indian markets in the second quarter of FY 2024-25 has not been very special. There is also no possibility of any policy arrangement coming which will give some additional strength to the Indian market. In such a situation, withdrawals from foreign institutional investors (FIIs) are likely to continue this week as well.

Some market experts have also expressed the possibility of the decline in the market continuing and said that the government should take some steps to stop the withdrawal of FIIs.

In the trading week ending on 25 October, the Mumbai Stock Exchange index fell by 1823 points. If we talk about one month, the Sensex has plunged by 4,800 points i.e. 6 percent. Many experts are citing the withdrawal of FIIs from the Indian market as the reason for this decline.

Are FIIs selling due to long term capital gains tax?

Sandeep Sabharwal, a well-known stock market expert, has written on the social media site X, addressing Finance Minister Nirmala Sitharaman, that, “In the last one month, FIIs have withdrawn $ 12 billion from the Indian market. This is a record. The government should sit with them and discuss why this is happening, if it is happening due to valuation (valuation of shares) then it is okay but if there is some other concern then it should be looked into.” Sabharwal was pointing towards increasing the capital gains tax.

Why did the shares of medium and small companies suffer the most?

At the same time, Vinod Nair, Head (Research) of Geojit Financial Services, says, “FIIs’ selling has been putting constant pressure on the Indian stock market. This is hitting the shares of medium and small companies the most. FIIs were selling for a long time, but domestic investors did not let their selling dominate by staying in the market for a long time, but now FIIs have started withdrawing their investments more rapidly. This situation may continue in the future as well.”

One of the main reasons behind FIIs’ withdrawal is that now China’s stock market is looking more attractive than India. The Chinese government has given many incentives to accelerate the economic growth rate, due to which there are chances of an increase in the economic growth rate.

What is the impact of uncertainty regarding the US presidential election?

Expressing the possibility of this uncertainty continuing even after Diwali, Mint CFD CMO Raj Patel says, “Institutional investors are also in a dilemma due to the uncertainty regarding the US presidential election. The way the BRICS countries talked about reducing the role of the dollar in international trade last week has also had an adverse effect on the international investor community. This will also affect the Indian market like other markets of the world.”

Prashant Tapse, Senior VP (Research) of Mehta Equities, says, “FIIs are also worried due to the threat of recession at the global level. Even though there is encouragement from China, there is a downward trend in the prices of crude oil in the international market. This shows that the fear of recession has become stronger.”