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Business News/ Markets / Stock Markets/  Nifty 50, Sensex drop about 1% each: Explained with 5 reasons why Indian stock market is falling today
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Nifty 50, Sensex drop about 1% each: Explained with 5 reasons why Indian stock market is falling today

Stock Market Today: Nifty-50 index and Sensex started on a weak note and slipped further on Friday. The Nifty-50 and Sensex saw sharp cuts of almost 1% after having scaled all time highs on Wednesday. Explained with 5 reasons why Indian stock market is falling today

Nifty-50 index, Sensex decline 0.5%: 5 reasons, why markets remain on the edge? (MINT_PRINT)Premium
Nifty-50 index, Sensex decline 0.5%: 5 reasons, why markets remain on the edge? (MINT_PRINT)

Stock Market Today: Markets started on a weak note and slipped further on Friday. The Nifty-50 and Sensex saw sharp cuts of almost 1 % each after having scaled all time highs on Wednesday.  

While Thursday was a market holiday in India, Nifty had scaled all-time highs of 22,775.70 on Wednesday as Sensex also hit all time highs of 75,124.28 before it closed above the 75,000 Mark (75,038.15) for the first time in the history.

The Weakness in markets on Friday was attributed to the weak global cues. The US markets since Wednesday have remained volatile following the hotter than expected US Inflation that added to concerns of the market participants on rate cuts getting postponed. The expectations of higher for longer keep markets and investors on the edge. The rising bond yields and dollar index, rising  commodity prices, Geopolitical tensions remain other concerns.

Also Read-Nifty 50, Sensex on April 12: What to expect in trade today

Five reasons that may keep markets on the edge

1.Rate cut expectations getting delayed

 The equity markets had been rising through the world on expectations that higher interest rate cycle being behind and US Federal Reserve will start cutting interest rates soon. The hotter than expected inflations numbers however have dampened hopes that US Fed may start cutting interest rates soon. Deepak Jasani Head of retail Research at HDFcC Securities  said that hotter-than-expected inflation data dampened hopes that the Federal Reserve would begin cutting interest rates as early as June leading to a fall in US equity markets on Wednesday.

Many analysts now don't see US Fed cutting interest rates by as early as in June. This also is impacting expectations on at least three rate cuts in 2024.  

“From the global equity market perspective sticky US inflation is a negative since it has reduced hopes of three rate cuts by the US" said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

2.Impact on FPI flows 

Hotter than expected US inflation also meant that the US bond yields and dollar index, both inched higher . A stronger dollar and higher bond yields, both can impact Foreign inflows as investment in emerging markets become less attractive if US bond yeilds and Dollar index are stranger.

Vijayakumar, attributed the spike the US bond yields to hotter-than-expected US inflation and added that this is negative for FPI inflows. 

Also Read- Vodafone Idea to launch 18,000 crore FPO at 10-11 price band

3.The rise in commodity prices.

The prices of base metals as well as petroleum products have hardened over recent paste. On the London Metal Exchange Aluminium prices that were close to $2220 a tonne levels in mid-March have rise to past $2400 a tonne levels. Copper prices that were at close to $8700 a tonne levels on the LME in March, have now risen to around $9200 a tonne levels. Notably Brent Crude price that was at around $81-82 a barrel at start of March is now close to $90 a barrel levels. 

Rising commodity prices can once again stroke inflation if they remain elevated for long , said experts

3.Geopolitical Risk

The heightened tension in the middle East amidst Israel Hamas Conflict and war, once again leave investors watchful and any further escalation in the conflict or being spread to other regions in the middle East can have repercussions

5. Earning for Q4

The focus of market will shift to earnings by India Inc, and many analysts don't have huge expectations from Q4 earnings . Analysts at Jefferies India Pvt Ltd in their Q4 result preview had said that "Earnings growth will decline to 5-qtr low of 7% YoY for Jefferies Coverage for the March '2024 quarter as earnings for the banks and IT sector decline.

Thus earnings performance by corporate India will be watched eagerly to drive upside for the markets,

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 taking any investment decisions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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ABOUT THE AUTHOR
Ujjval Jauhari
Ujjval Jauhari is a deputy editor at Mint, with over a decade of experience in newspapers and digital news platforms. He is skilled in storytelling, reporting, analysing and writing about stocks, investment ideas, markets, corporates and more. He is based in New Delhi.
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Published: 12 Apr 2024, 01:11 PM IST
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