Nifty 50 and Sensex crash
Experts suggest that because Indian stocks are overbought and the Lok Sabha elections are halfway through, early profit booking has been sparked on Dalal Street.
Stock market today:
On Thursday, May 9, the Indian stock market had a sell-off for the fifth straight session. Early in the morning trading, the Nifty 50 index saw a decline, closing 345 points, or 1.55%, lower. At 72,404.17, the BSE Sensex closed 1,062.22 points, or 1.45%, lower after opening in the red as well. The benchmark indices saw a decrease for the fifth straight session today.
For the past seven sessions, there has been selling pressure on the Nifty Bank index, resulting in a 1900 point loss. The ongoing Lok Sabha elections, FII selling, the US dollar’s recovery, the hawkish US Fed driving up Treasury yields, the unimpressive Q4 results of the 2024 season, and the rising India VIX Index are some of the main factors that have been pulling the Indian stock market lower, as per the astute observations of our esteemed stock market experts.
Why is the value of stocks declining?
“There are combinations that are dragging Indian indices together,” stated Saurabh Jain, vice president of research at SMC Global Securities, in response to questions about the factors affecting the Indian stock markets. “One of the major reasons weighing on the Indian stock market these days can be attributed as ongoing Lok Sabha polls, continuous selling by FIIs, not so impressive Q4 results season, hawkish US Fed, and rising VIX India Index.”
Why did the stock market decline today?
1] Lok Sabha elections:
“We are seeing bottom fishing in the broad market as the small-cap and mid-cap indices shot up on Thursday and outshined the frontline indices,” stated Avinash Gorakshkar, Head of Research at Profitmart Securities, offering a balanced assessment of the situation. “The Indian stock market has already discounted the victory of BJP-led NDA in the ongoing Lok Sabha polls. Now, the Indian stocks are in overbought condition and hence premature profit booking has triggered on Dalal Street,”
2] FIIs’ selling:
“FIIs are selling heavily this month as they have remained net sellers on all sessions in May 2024. They have sold out Indian shares worth ₹15,863 crore in the cash segment till Thursday while the FIIs have sold out shares worth ₹5,292 crore in the Future & Option (F&O) segment,” said Avinash Gorakshkar of Profitmart Securities.
3] The US Federal Reserve’s:
“Hawkish talks by some US Fed officials recently have put extra pressure on the Indian stocks. After witnessing some profit booking early this month, such statements enabled the US dollar rate to rebound. Rising US dollar prices have fueled the US Treasury yield as well. So, investors are expected to switch money from equity and other assets to currency and treasury markets,” according to Saurabh Jain of SMC Global Securities.
4] Unimpressive Q4 results for 2024:
Saurabh Jain continued, saying there is no reason to be surprised by the present Q4 results for the 2024 season. Additionally, this did not lead to increased purchases on Dalal Street. “As the market had already discounted the Q4 results 2024 ahead of the quarterly results season, investors are booking profit now as the season is about to end next week,” stated Saurabh Jain.
5] Rising VIX Index :
“The continuous rise in the VIX Index has also put doubt among the fresh buyers, who are shy of pumping money in the current volatile market. As India VIX Index has a history of climbing during Lok Sabha elections and we are just in the middle of general elections 2024, the volatility is expected to pick up further as we come close to the poll results date,” Avinash Gorakshkar of Profitmart Securities said.