Why is the Indian stock market falling for the last three days? — explained with five reasons

Stock market today: Following the uncertainty before the commencement of the US Fed meeting this month, the Indian stock market extended its losing streak for the third straight session on Friday. In early morning deals, the Nifty 50 index opened downside at 25,093 and touched an intraday low of 24,801, losing around 479 points in three sessions. Due to this selling pressure, the 50-stock index also lost its crucial base of 25,000.  The Nifty 50 index finally finished 1.17 per cent lower at 24,852.

Today, the BSE Sensex opened with a downside gap at 82,171 and touched an intraday low of 80,981, logging an intraday loss of 1,220 points during Friday deals. While touching this intraday low, the 30-stock index logged around 1,874 points in the last three successive sessions. The BSE Sensex finally finished 1.24 per cent lower at 81,183.

Speaking on the Indian stock market crash, Vishnu Kant Upadhyay, AVP, Research and Advisory at Master Capital Services, said, “The key Indian benchmark indices, Sensex and Nifty50, declined by nearly 1%, trading at 81,400 and 24,900, respectively, as investor sentiment weakened ahead of the US jobs report, which is expected to provide clarity on the potential scale of a US interest rate cut. Investors stay on the sidelines, holding cash in anticipation of the report’s release.”

Major levels for Sensex, Nifty today

Speaking on the important range that one must keep in mind, Sumeet Bagadia, Executive Director at Choice Broking, said, “The BSE Sensex today is in 80,800 to 82,200; the Nifty 50 index is in 24,700 to 25,200 whereas the Nifty Bank Index is in 50,500 to 51,500. Keeping these important levels in mind, one should maintain a strict stop loss.”

Why is India share market falling?

According to stock market experts, this continuous fall in the Indian share market can be attributed to two major reasons: uncertainty before the US Fed meeting and overbought conditions on Dalal Street. They said that the bounce back in the US dollar rates after a revision in the US inflation average, weak US job data and flat US jobless claim data have further contributed to this loss in the Indian stock market for the last three straight sessions.

Here we list out the top five reasons that are dragging the Indian stock market:

1] US Fed meeting: “Major reason for the market fall in uncertainty over the interest rate cut announcement in the fast approaching US Fed meeting this month. If the US Fed declares a 25 bps rate cut, then the market may not cheer the US Fed's rate cut announcement, whereas 50 bps or above may inject extra fuel into the markets across the globe. So, those who don't want to take any risk are offloading their long positions and insulating themselves from any hiccups post-US Fed meeting,” said Avinash Gorakshkar, Head of Research at Profitmart Securities.

2] Overbought condition: “Before the sell-off trigger in the Indian stock market on Wednesday this week, the market had rallied for 14 days. So, the Indian stock market was overbought, and current selling should be taken as a mere profit-booking only,” said Seema Srivastava, Senior Equity Research Analyst at SMC Global Securities.

3] Rebound in US dollar rates: “After revision in the US Inflation average last week, the US dollar witnessed some value buying on Wednesday last week, which helped the US dollar index to bounce back after touching 7-month lower levels, which is close to 100 mark. US dollar index is currently near the 101 mark, which means the US dollar index has gained around one per cent in the last three straight sessions, fueling demand in the forex and the treasuries and bonds,” said Anuj Gupta, Head of Commodities & Currencies at HDFC Securities.

4] US job data: “The US job openings in July have dropped to three and a half-year low, which has triggered a slowdown in the US labour market. This is also dragging the global markets, including Dalal Street,” said Avinash Gorakshkar of Profitmart Securities.

5] US inflation concern: “Fear of slowdown in the US labour market has renewed the fear of US inflation concern, which may force US Fed to rethink its decision to go for a rate cut. Even if they go with their dovish stance, the market fears that the US Fed rate cut might not be more than 25 bps,” said Profitmart Securities.

Stocks to buy today

Regarding stocks to buy amid the stock market crash, Seema Srivastava of SMC Global Securities said, “One can look at the sectors like banking, infrastructure, power, FMCG and pharma for value picks.” 

Asked about the stocks to buy today amid the stock market crash, Seema Srivastava recommended buying these five shares: IPCA Labs, City Union Bank, Bajaj Consumer, Amara Raja Energy, and PNC Infra.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.