The domestic stock market barometer- the Sensex and the Nifty 50- suffered strong losses in intraday trade on Friday, November 7, extending their losing run to the third consecutive session.
In these sessions, the Sensex has crashed over 1,300 points, or 1.6 per cent, while the Nifty 50 has dropped by more than 440 points, or 1.7 per cent.
On Friday, the Sensex plunged over 600 points, or nearly 1 per cent, to an intraday low of 82,670.95, while the Nifty 50, too, dropped by nearly a per cent to an intraday low of 25,318.45. The selloff was broad-based as the Nifty Midcap 100 and the Nifty Smallcap 100 indices also dropped by up to a per cent.
Why is the Indian stock market falling?
Let’s take a look at five key factors that are driving the Indian stock market down:
1. Weak global cues
Weakness in global markets is one of the primary triggers behind the recent selloff in the Indian stock market.
Globally, sentiment has turned cautious over stretched valuations of the “mother market”, Wall Street.
On November 7, major Asian stock markets suffered strong losses, with Japan’s Nikkei and Korea’s Kospi crashing 2 per cent each, following an up to 2 per cent fall on Wall Street overnight.
While investors are now looking for fresh triggers amid dimming prospects for another rate cut by the US Federal Reserve, the ongoing US government shutdown, which began on October 1 and is now the longest in history, has created a dearth of economic data and is creating a sense of uncertainty in the market.
2. Indian market lacks dominance of tech, commodities players
The rally in global markets this year has been largely driven by tech companies, fueled by strong optimism surrounding artificial intelligence (AI). India lacks strong global players in the segment. experts say this is one of the reasons why Indian stock markets have underperformed this year so far.
“Globally, two sectors- tech and commodities- are driving the rally. India does not have many strong names in these segments. This is one of the reasons why we are underperforming,” said Shankar Sharma, ace investor and the founder of GQuant, an AI-tech company.
(This is a developing story. Please check back for fresh updates.)
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
