The Indian stock market has been experiencing a significant downturn for four consecutive sessions, with major indices like the Nifty 50 and BSE Sensex registering notable losses.
The Nifty 50 index fell by around 560 points over these sessions, while the BSE Sensex recorded a drop of 1,564 points. Several global and domestic factors have contributed to this decline, leading to widespread selling pressure across sectors.
Reasons Behind the Indian Stock Market Decline
- US Presidential Elections
The upcoming US Presidential elections have injected a sense of uncertainty into global markets, including India. Foreign Institutional Investors (FIIs) are scaling back investments, anticipating volatility ahead of the elections. The uncertain outcome of the race has made international investors cautious, leading to a broader sell-off in emerging markets like India. - Geopolitical Tensions
Rising geopolitical tensions in the Middle East have significantly impacted global markets. Concerns over escalating conflicts have driven oil prices higher, increasing worries about inflation and global economic stability. This uncertainty has further discouraged investors, leading to a risk-averse attitude in the market. - Disappointing Q2 2024 Earnings
The July-September quarter results for FY 2024 have been weaker than expected for many large-cap companies. Lower-than-expected earnings have compounded the negative sentiment, leading to a selling spree in both the Nifty 50 and Sensex. Investors were hoping for strong results to buoy market confidence, but the earnings season has instead added pressure on stocks. - Maharashtra State Assembly Elections
Domestic Institutional Investors (DIIs) are adopting a wait-and-watch approach as the Maharashtra State Assembly elections approach. This election is seen as a litmus test for the central government, as Maharashtra is a key state for political and economic influence. The uncertainty over election results has caused many domestic investors to hold back, further weakening market support. - Weakness in the Indian Rupee
The continuous decline in the Indian Rupee (INR) against the US dollar has exacerbated the market’s troubles. A weaker rupee leads to higher import costs, which can affect companies dependent on foreign raw materials, adding to the already existing market stress.
Market Outlook and Support Levels
Technical analysts believe that the Nifty 50, having broken its crucial 24,700 support level, could find support at 24,500, with further support expected at 24,350-24,300. The Sensex is similarly expected to find support near the 80,400 level.
While short-term volatility remains high, experts suggest long-term investors focus on sectors such as banking and consumer goods, which may present opportunities when market conditions stabilize.
Disclaimer
The information in this article is for educational purposes and should not be considered financial advice. Always consult a financial expert before making investment decisions.