stock market
On Monday, July 20, stock market benchmarks – Sensex and Nifty 50 – witnessed sharp losses in morning trade amid weak global cues. Sensex fell by more than 700 points (ie about 1%) to hit a low of 77,445, while Nifty 50 fell by more than 180 points (ie about 1%) to hit a low of 24,150. Shares of Tech Mahindra, Bharti Airtel and ICICI Bank gained more than 1 per cent each and were the top Sensex gainers, while Axis Bank and HDFC Bank shares fell by about 5 per cent each and were the top losers.
A decline was also seen in the rest of the market. Nifty Midcap 100 and Nifty Smallcap 100 were trading with slight losses. Sector wise, Nifty Private Bank index declined by more than 2 percent and was the leading loser. Nifty Realty and Nifty Financial Services also fell by more than 1%.
At the same time, a rise of more than 1 percent was seen in the Nifty PSU Bank index. However, overall the market trend was slightly positive. On NSE, an increase was seen in 1,355 shares and a decline in 1,246 shares, while there was no change in 116 shares. Let us also tell you what are those 6 reasons due to which the stock market is witnessing a decline.
Increasing tension between Iran and America
Tension between Iran and America increased further over the weekend. America attacked Iran for the ninth consecutive night, while America’s allies Kuwait and Bahrain reported more attacks from Iran. The Islamic Revolutionary Guard Corps said on Monday that two oil tankers exploded and were rendered useless. These tankers were trying to pass through an unsafe southern route through the Strait of Hormuz. It is alleged that the American Army had instigated them to use this route.
Oil prices cross $90
Due to increasing tension between Iran and America, there was a huge rise in oil prices. Brent crude futures rose more than 3% to near $91 a barrel. Which is the highest level after June 11. Last week, it had seen an increase of 15.9 percent, which was the biggest weekly increase since April.
US West Texas Intermediate crude was at $84.20 per barrel, up more than 2 per cent and reaching its highest level since June 12. Oil prices have increased at a time when the supply of oil from the Strait of Hormuz has been halted due to the ongoing conflict. This is an important sea route, through which 20% of the world’s daily oil and gas supply passed before the war.
Weak signals from global market
Amidst the decline in the global market, there is an atmosphere of recession on Dalal Street also. On Monday morning, Japan’s Nikkei and South Korea’s Kospi both fell by more than 4 percent. Taiwan Weighted was trading in the red with slight losses. A huge fall was also seen in Wall Street in the last session. The S&P 500 and the tech-heavy Nasdaq fell more than 1 percent on Friday, while the Dow Jones Industrial Average lost about 0.8 percent. Talking about the entire week, S&P 500 fell by 1.55 percent, while Nasdaq closed down by 2.9 percent and Dow closed down by 0.93 percent.
Heavy fall in bank shares after Q1 results
The main reason for the fall in the market was the huge selling in the shares of big banks, because their Q1 results were not as expected. Shares of Axis Bank and HDFC Bank fell by about 5 per cent, while Kotak Mahindra Bank shares fell by more than 3 per cent, making these shares the biggest losers in the Sensex. These big private banks had declared the June quarter results on Saturday, and today the impact of these results was visible on their shares.
Increase in bond yields
US Treasury yields increased, further weakening equity market sentiment. The yield on the benchmark US 10-year note rose to 4.551 per cent, while the yield on the 30-year bond rose to 5.073 per cent. The yield on the 2-year note, which usually moves with expectations about the Federal Reserve’s interest rates, rose to 4.183 percent. Rising bond yields generally make bonds more attractive to investors, which may lead to some decline in the market.
fall in rupee
The rupee fell 11 paise to 96.41 against the US dollar in early trade on Monday. Jatin Trivedi, VP Research Analyst, Commodity and Currency at LKP Securities, said the rupee remained weak due to high crude oil prices and cautious inflow of foreign funds. He said that market participants will closely monitor global developments, crude oil movement and FII activities for the next move. He further said that technically, the rupee is expected to trade in the range of 9696.55, and the overall trend will be towards weakness.
