When there was a rise in the stock market on Tuesday, it seemed that Sensex and Nifty will rise further in the coming days. There was a reason for that too. Trump had indicated that the Iran war would end soon. Value buying had started from investors. Rupee appreciated and crude oil prices fell below $90 per barrel. But on Wednesday the stock market once again fell. Experts believe that the stock market has not yet shown any signs of the war ending.
Also, after the rise on Tuesday, investors have also accepted that the war is not going to end soon. Due to which there was selling by investors. On the other hand, selling is being done continuously by foreign investors. It is also issued in rupees. Due to which the main index Sensex of Bombay Stock Exchange appeared down by more than 1000 points during the trading session. At the same time, the main index of National Stock Exchange, Nifty, has seen a decline of 253 points. Due to which stock market investors have suffered a loss of Rs 2.50 lakh crore. Let us also tell you what are the main reasons for the decline in the stock market?
Big fall in stock market
Indian stock markets fell once again on Wednesday, with the Sensex falling more than 1,000 points and the Nifty 50 falling below the 24,000 mark. This fall came when the benchmark indices opened flat amid mixed global cues and the ongoing tension between Iran-US-Israel. At 12.50 am, the Sensex fell by about 965.08 points to 77,230.73, while the Nifty 50 fell by more than 275.85 points to 23,985.65.
Shares of Axis Bank, Mahindra & Mahindra (M&M), Bajaj Finance, Bharti Airtel, HDFC Bank and Bajaj Finserv were the top losers on the Sensex, falling 2-4% each. Adani Ports, NTPC, Sun Pharma and Tech Mahindra were among the top gainers. Many sectoral indices on NSE lost their morning gains and fell sharply. Nifty Auto index fell nearly 2% to become the top sectoral loser, while Nifty Private Bank was the next loser, falling more than 1.8%. Meanwhile, Nifty Pharma gained more than 1%.
Main reasons for the decline in the stock market
Iran-Israel war continues
Despite earlier hopes for a quick resolution to the war in the Middle East, geopolitical tensions continue to haunt the oil-rich region. The US and Israel launched what some described as the biggest attack of the war on Iran, even as US President Donald Trump said on Monday that the conflict “could be over soon”. Iran’s government has warned that its government security forces are “ready” to face any resumption of anti-government protests.
The country targeted Israel, Lebanon and many areas of the Gulf on Wednesday morning. This has increased expectations of the Strait of Hormuz being closed for a long time. Iran’s Islamic Revolutionary Guard Corps has threatened to stop oil shipments from the Gulf if US and Israeli attacks do not stop.
fall in rupee
The Indian rupee opened 0.14 percent lower at Rs 91.9350 against the US dollar, while the previous closing price was Rs 91.8050. Investors are closely watching the movement of the Indian currency after it closed at an all-time low of 92.35 against the US dollar on Monday. Jatin Trivedi, VP Research Analyst, Commodity and Currency at LKP Securities, said that the expected trading range remains between 91.25 and 92.60, the movement in crude oil prices and the direction of the dollar index will continue to guide the short-term trend of the currency.
FII profit booking continues
Foreign investors remained net sellers on Tuesday as well, selling Indian equities worth Rs 4,672.64 crore yesterday. Although this does not reflect their trading behavior today, continuous selling by foreign investors over the last several sessions has spoiled investor sentiment. According to market data, FPIs sold Indian shares worth more than Rs 21,800 crore in the first week of March. This happened when foreign investors remained net buyers of Indian stocks in February.
profit booking
Today’s decline in stock markets was probably also due to profit booking. There was a rise in the Indian stock markets yesterday, with the Sensex rising by more than 600 points and the Nifty closing above 24,250. This happened when US President Donald Trump hinted at an early end to the Iran dispute and the fall in oil prices improved the environment after continuous selling.
Trump told CBS News on Monday that he believes the war against Iran is “absolutely over” and that Washington is “far ahead” of his initial estimated timeframe of four to five weeks. As a result, the prices of crude oil fell significantly, falling from the level of $120 to below $90 per barrel. Crude oil prices continued to fall on Wednesday, with Brent crude futures falling 82 cents to 86.98 per barrel.
What are the experts saying?
Rupak Dey, Senior Technical Analyst, LKP Securities, had placed the immediate support of Nifty 50 at 24,150, which, however, has already been broken. The analyst had warned that selling pressure could increase again if it goes below this level. He had said that if the index goes below 24,150, it can fall further to 23,800.
Anand James, Chief Market Strategist, Geojit Investments, said that yesterday Nifty went down as expected, testing the range of 24,300-24,370. This will remain the breakout point to consider the possibilities of 25,000. Nevertheless, yesterday’s Hammer formation indicates positivity, which will continue till it remains above 24,210. The downside marker could be near 24,050.