Stock market crash: Why is Indian stock market falling? Explained with five crucial reasons

Stock market crash: After opening higher during early morning deals, the Indian stock market finally came under the sell-off heat. The Nifty 50 index crashed below the psychological 24,200 support and touched an intraday low of 23,998, recording around a one per cent intraday dip during Thursday's dealings. The BSE Sensex opened upside at 80,281 but soon came under the sell-off pressure and touched an intraday low of 79,281, whereas the Nifty Bank index lost around half a per cent in this stock market crash.

According to stock market experts, the Indian stock market is falling today after trading range-bound for nearly three sessions. They said that due to the lack of big international triggers in the wake of the closed US stock market, DII is in a watch situation due to the approaching Indian Union Budget 2025, FIIs' selling, strong US dollar, and discounted geopolitical triggers are some of the significant reasons that are pulling down the Indian stock market today. However, they maintained that the current stock market crash can be termed mere profit-booking if the Nifty 50 index closes above the crucial 24,050 mark.

Why is the Indian share market falling?

1] Stock market holiday in the US: “The Indian stock market surged yesterday due to the rising US stock market. However, there is a lack of global cues due to the stock market holiday in the American market today. This could be the possible reason for profit-booking trigger in the Indian stock market despite a gap-up opening in the Opening Bell,” said Mahesh M Ojha, AVP — Research at Hensex Securities.

2] FII's selling: The Hensex Securities expert said that overall, FIIs were net sellers in November, and DIIs are also not buying the way they were earlier. This could also be a reason for the Indian stock market not sustaining higher levels.

3] Union Budget 2024: Regarding DIIs not buying in the current Indian stock market, Mahesh M Ojha said, “DIIs are waiting for the final cue from the Indian government after their victory in the Maharashtra Assembly Election. As the Union Budget 2024 is just two months away, they are in a Catch-22 situation, and hence they are non-participant in the current Indian stock market.”

4] Strong US dollar: Pointing towards the rising US dollar rates, Anshul Jain, Head of Research at Lakshimishree Investment and Securities, said, “Investors are switching money from the gold and equities to bond and forex market as the US dollar prices are continuously rising. This is also a reason for FIIs' continuous selling in the Indian stock market.”

5] Discounted geopolitical tension: “We witnessed a bounce back in the Indian stock market in the last two sessions after the news broke of a ceasefire in the Israel-Hezbollah war. However, the geopolitical trigger has been discounted, and the focus has once again shifted towards the Russia-Ukraine war. Hence, there is selling pressure in the Indian stock market,” said Avinash Gorakshkar, Head of Research at Profitmart Securities.

Stock market outlook

Speaking on the outlook for the Indian stock market after this fall, Mahesh M Ojha of Hensex Securities said, “The Nifty 50 index hs crashed below the 24,050 mark, which is crucial for the frontline index. If the 50-stock index closes above this crucial support, we can witness a rebound in the Indian stock market soon. Otherwise, the Nifty 50 index may test 23,800 levels soon.” In this weak market, he advised day traders to look at railways, oil, energy, and other infrastructure stocks.

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.