Share Market Crash: Why did the Indian stock market crash, understand the reason in five points
The Indian stock market saw a huge decline on Monday after the Diwali holiday. Both the major indices – Sensex and Nifty fell by more than one and a half percent in early trade. There was a big decline in the shares of all sectors. The biggest blow was to billionaire businessman Mukesh Ambani’s Reliance Industries. It fell by about 4 percent in early trade. Let us know what is the reason for this huge decline in the stock market.
Uncertainty about US presidential election
Presidential elections are going to be held in America on November 5. This time a tough competition is being seen between Kamala Harris and Donald Trump. There is a huge difference in the economic and geopolitical views and policies of both. This is the reason why investors are adopting a very cautious approach before the election results and their focus is on selling.
Fed Reserve’s decision on interest rates
The US central bank – Federal Reserve is going to meet on November 7. A decision will be taken on interest rates in this. In the recent past, the economic indicators of America have given better signals. This has reduced the expectation of any major cut in interest rates. This has also increased the volatility in the Indian stock market, as many companies have a big business in the US.
Effect of rising crude oil prices
OPEC+ announced on Sunday that it will not increase production right now due to weak demand and increasing supply outside the group. Earlier OPEC+ intended to increase production in December. This saw a surge in crude oil prices. This is the reason why shares of companies like Reliance Industries, Indian Oil and ONGC have fallen sharply.
Weak second quarter results
The financial results of many big companies in the second quarter of the financial year 2024-25 were not as expected. Bajaj Auto, Kotak Mahindra Bank, RBL Bank and IndusInd Bank are examples of this. Due to weak results, the morale of investors has weakened and they are avoiding making big bets at this time.
Selling by foreign investors
Foreign Institutional Investors (FIIs) are continuously selling in the Indian stock market. Foreign investors made a huge withdrawal of Rs 94,000 crore (about $11.2 billion) from the Indian market in October. This became the worst month ever in terms of withdrawal. This trend is continuing in November as well. Foreign investors are selling due to the high valuation of the Indian stock market and turning to the Chinese market.
