Why is the Indian stock market falling today? Explained with five crucial reason
- Stock market news: According to experts, the Indian stock market is falling due to five primary reasons — weak corporate earnings, economic uncertainty, FIIs' selling, high valuations ahead of the new FY, and US banks flying gold from Longdon to New York
Stock market news: The Indian stock market witnessed some buying on Monday after losing for eight straight sessions. However, the cheer faded soon as frontline indices came under selling pressure again during early morning deals on Tuesday. The Nifty 50 index opened in the green at 22,963 but failed to sustain at higher levels and touched the intraday low of 22,801. The BSE Sensex, too, opened higher at 76,073 but slipped and touched an intraday low of 75,531. The Nifty Bank index also traded in the red after making an intraday low of 48,814.
Dalal Street is witnessing a sell-off across indices with the broader market facing the selling heat. The BSE Small-cap index dropped more than 2.10 per cent, while the BSE Mid-cap index crashed over 1.15 per cent.
“The Nifty 50 has made a strong base at 22,800, and in sustaining above this support, we can expect the key benchmark index to touch 23,300 soon. The market bias may improve once the frontline index closes above the 23,300 mark,” said Sumeet Bagadia, Executive Director at Choice Broking. Bagadia said that on breaking below 23,800 to 23,750 support, there could be another 350 to 400 points downside in the 50-stock index.
Why is the Indian stock market falling?
According to stock market experts, Dalal Street is under selling pressure due to five crucial reasons: weak corporate earnings, economic uncertainty, FII selling, high valuations ahead of the new financial year, and US banks flying gold from London to New York. They said the weak Indian National Rupee (INR) is also a reason for continued weakness in the Indian stock market.
Stock market crash: Top 5 reasons
1] Economic uncertainty: “Several factors contributed to the market downturn, with sentiment particularly rattled by US President Donald Trump’s announcement of reciprocal tariffs on US trading partners,” said Puneet Singhania, Director of Master Trust Group.
2] US banks flying gold from London to New York: “Amid fear of trade war due to Donald Trump's tariff policy, US banks are flying gold worth billions of US dollars to New York, which has triggered a buzz that the US may impose a tariff on gold export from Europe. This has triggered buying in gold; hence, investors are switching positions from equities to gold. This is also a reason for continued selling in the Indian stock market,” said Avinash Gorakshkar, Head of Research at Profitmart Securities.
3] Disappointing Q3FY25 earnings season: “3QFY25 earnings season was disappointing, with single-digit PAT growth for the Nifty and BSE500. This triggered another round of downgrades, though less severe than in Oct-24. The markets remain volatile, with SMIDs selling off 15.6% since 1-Jan. We expect the market to stay under pressure through this quarter but to recover from 1QFY26 as earnings stabilise and global stresses ease. We see the Nifty in a buy zone at ~22.5k, with Discretionary, Healthcare, and Telecom our key OW sectors,” Seshadri Sen, Head Of Research And Strategist at Emkay Global Financial Services.
4] High valuations ahead of new FY: “The Nifty is now trading at a 1YF P/E of 19.3x, near its 10Y LTA. The savage correction in SMIDs has derated the Nifty MidSmallcap400 Index P/E to 30.1x (TTM), below LTA of 37.9x; individual mid and small-cap indices are trading below the LTA. The median PER of the SMID index has also fallen by 8.8% since 30-Sep-2024 to 30x. The percentage of BSE-500 stocks trading below 30x PER (TTM) has increased, from 30.4% on 30-Sep-2024 to 39.4% after the correction,” Seshadri Sen of Emkay Global said.
5] FII selling: “By the end of the 14 February 2025 session, FIIs had sold Indian stocks worth over ₹29,000 crore whereas the DIIs had bought Indian shares worth over ₹26,000 crore in the cash segment. This clearly indicates that DIIs are not in a mood for bottom fishing, which we witnessed post-Covid,” said Anshul Jain, Head of Research at Lakshmishree Investment and Securities.
Avinash Gorakshkar said that DIIs are not coming forward and buying heavily, which could be due to the fast-ending current fiscal year, as DIIs generally don't buy ahead of the end of the financial year.
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
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