Black Monday for Dalal Street! Will the downtrend in Indian stock market to be continued?

Last week was really bad for the Indian stock market. Perhaps the worst in more than three years. Of course, there were many reasons for the decline in the Indian stock market. Such as the Israel-Iran conflict, market regulator SEBI’s tightening of rules related to futures and options trading, selling by foreign investors, high valuation of the Indian market, and the Chinese stock market becoming attractive after the stimulus package.

But the most important question is whether the trend of decline in the Indian market will continue in the future. The answer to this will depend on some important factors.

Will the selling continue on Dalal Street?

Now a large part of the Indian stock market is of those young people who have started trading or investing since the Corona epidemic. Now obviously these people have not seen any major correction, except for some special occasions like the day of the Lok Sabha election results. In such a situation, last week’s decline is a big dent in their portfolio.

So far those investors were following the strategy of ‘buy in dip’. It was also effective. But, if they do panic selling now, then the Indian market can see a big decline in the future.

Is there any hope of recovery in the stock market?

There are two major reasons for the sell-off in Indian stocks. One is the heavy selling by Foreign Institution Investors (FII) and the other is the deepening of the Israel-Iran conflict. However, it seems that the Indian market is weakening due to the selling by FII at the moment, because there is no significant impact of the Israel-Iran conflict on the US and Asian markets.

On Friday (October 4) also, all three major US indices – Dow Jones, Nasdaq Composite and S&P 500 closed with a good gain. If the Indian stock market also keeps pace with the US market, then a recovery can also be seen on Dalal Street on Monday.

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