Why Indian stock market fell on Monday — explained with 5 reasons

As Israel-Hamas war entered 17th day after its outbreak on 7th October 2023, Indian stock market continue to remain under the grip of bears for fourth straight session during Monday deals. Nifty 50 index opened lower at 19,521 and went on to hit intraday low of 19,404 during Monday session, losing over 400 points in four straight sessions. BSE Sensex on Monday opened at 65,419 levels and went on to hit intraday low of 65,022 levels, losing over 1400 points in last four sessions. Likewise, Bank Nifty index on Monday opened at 43,822 levels and made intraday low of 43,583 levels, losing around 825 points in last four days.

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According to stock market experts, Israel-Hamas war entering 17th day, continuous selling by FIIs, rising crude oil fueling inflation pressure, strong dollar and 10-year yield on US Treasuries hit 5% for the first time since 2007 are the major five reasons that has been dragging Indian stock market for the last four days.

Israel-Hamas war

"Israel Hamas war has fueled uncertainty among investors as Middle East tension is yet to get any solution despite more than a fortnight of its outbreak. This geopolitical uncertainty has put equity under pressure and hence Indian stock market is under pressure for last four days," said Arun Kejriwal, founder at Kejriwal Research and Investment Services.

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Strong US dollar

"Despite outbreak of the Israel-Palestime conflict, US dollar index has remained above 106 for the last one week. This is despite US Fed's dovish stance on interest rate hike. This could also be a reason equity markets in Indian feeling the sell off heat," said Avinash Gorakshkar, Head of Research at Profitmart Securities.

Inflation concerns

Avinash Gorakshkar went on to add that dur to the outbreak of Israel-Hamas war, crude oil prices has been rising continuously, which is expected to put pressure on the government exchequers as it imports more than 85 per cent of its oil demand. Hence, rise in inflation is one of the major concern that market is looking at after prolonged Israel-Palestine conflict.

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FII 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.

10-year US Treasuries yield at record high

"Global stocks including Indian markets were under pressure on Monday as the 10-year yield on US Treasuries hit 5 per cent for the first time since 2007," said Avinash Gorakshkar.

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