Stock market today: Why Sensex crashed over 3,300 points in six days — explained
- Indian stock market has been on a downward spiral due to uncertainties associated with the Israel-Hamas conflict, rising US Treasury yields and the US dollar, believe experts
Indian stock market today extended its losses for the sixth straight session on Thursday. The benchmark BSE Sensex began the day at 63,774 and swiftly touched an intraday low of 63,119 shortly after the opening bell. In the past six days, the 30-stock index has seen a decline from 66,428 to 63,119, amounting to a loss of over 3,300 points.
Similarly, the Nifty50 started off on a weak note for the sixth straight day on Thursday, hitting an intraday low of 18,843, which translates to a loss of approximately 970 points over this period. The Bank Nifty index also opened lower at 42,708, quickly dropping to an intraday low of 42,105, shedding around 2,300 points.
Why share market is down today?
On why share market is going down for the last six straight sessions, V K Vijayakumar, chief investment strategist at Geojit Financial Services said, “There is risk-off in global equity markets triggered by a combination of economics and geopolitics. The Israel-Hamas conflict continues to be a major headwind for markets. If the conflict lingers for long it has the potential to impact global growth, too, when the global economy is already in the midst of a slowdown. In the near-term, however, the strongest headwind for the market is the stubbornly high US bond yields. With the 10-year bond yield at near 5% FPIs are likely to be in the sell mode. Sectors like banking and IT which constitute the largest segments of the AUM of FPIs are likely to be under pressure. This will provide opportunities for long-term investors to buy quality stocks, particularly in banking, at attractive rates.”
Why Indian stock market is falling today — explained
Asked about the reasons for share market downtrend, Avinash Gorakshkar, head of research at Profitmart Securities listed out the following six reasons:
Israel-Hamas war
“Israel-Hamas war has entered 20th day and still there is no possible solution visible at current moment. This tension in the Middle East region has put uncertainty in the minds of investors, which has triggered panic selling across bourses,” said Gorakshkar.
Rising US Treasury yield
“After hitting record 16-year high of over 5 per cent, 10-year US bond yield witnessed some retracement on Tuesday but it has been rising continuously since Wednesday and now it has once again come close to 5 per cent levels. This has put pressure on global markets including Dalal Street,” said Gorakshkar.
Rising US dollar rates
Gorakshkar went on to add that US dollar index had came below 106 levels but it has also witnessed sharp upside movement in last two days and now it has not just regained the psychological 106 levels but it has come close to 107 levels, which an alarming situation for global equity markets including Indian stock market.
Participatory selling
Profitmart Securities expert went on to add that selling is not just restricted to large-cap index but in broad market as well. This has pulled down key benchmark indices.
In last four days, small-cap index has shed over 3,200 points whereas mid-cap index has fallen to the tune of 1,950 points in this time.
FIIs' selling
Gorakshkar went on to add that FIIs have been continuously selling in Indian equity market as US dollar has been rising continuously in last few weeks. In such a scenario, they might be shifting their money from emerging markets to other assets like gold, bond, currency, etc.
In October 2023, FIIs have sold out stocks worth ₹17,396 crore till 25th October 2023. On Wednesday session, FIIs sold Indian shares worth 4,236 crore.
Inflation concern
Profitmart Security expert went on to add that rising crude oil prices are also a concern for Indian stock market as it would raise inflation in India if the crude oil continues to remain in uptrend due to Middle East tension. He said that India imports near 85 per cent of its demand for crude oil and hence rising crude price is a sign of danger for Indian inflation and economy.
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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