Why are Sensex, Nifty falling for six months? Know 5 Key Reasons

Indian Stock Market: Nifty 50 and Sensex

The Indian stock market has been under the bears' grip for the last 13 sessions as a result Nifty 50 and Sensex have been closing in red for the last six months. They have inflicted a great deal of selling pressure on the market. The only positive aspect is that the Nifty 50 index continues to stay above the critical zone of 22,750 - 22,800.

Since reaching the peak 85,978 mark on 26 Sep 2024, the Nifty 50 slumped down to 22,795. This is close to a 3,482-point decrease. The BSE Sensex took a beating as well, dipping 10,677 points to land at the 75,311 mark.

Last week, bulls tried to fight back by purchasing small-cap and mid-cap stocks. Towards the end of the week, selling pressure wiped out almost all of their efforts. Nifty Midcap 100 and Small-cap indices went down by 1.32% and 0.7% respectively around the same time. They managed to erase over 2 % from their day’s highs. The market selling pressure was so high that even the BSE advance-decline ratio stood at 0.75.

 

Detailed video: 

 

 

Nifty 50 Historical Data of Last 6 Months

 

Stock Market Crash: 5 Key Reasons

1. Declining Valuations and Growth

Co-founder of Dezerv, Vaibhav Porwal, pointing towards India's growth and valuation concern remarked-

 

2. Inflation Worries

 Among the households in the US, there is milk under the skin for inflation expectations to rise among the political independents and Democrats while the Republicans' expectations drop slightly. Sales of existing homes have disappointed economists this past month. High mortgage rates and sky-high prices are weighing heavily on sales.

 

3. Buzz around London Cash Gold contract default

 Sugandha Sachdeva, founder of SS WealthStreet quoted in this reference-

 

Alongside other US inventories, the JP Morgan and HSBC gold reserves that have recently been shifted to New York have during the Trump election driven up stored inventories. It has been reported that recently about two percent of the reserves held in vaults by the Bank of England have come out of their vaults.

4. Aggressive US Fed

 "In the FOMC meeting minutes released last week, the US Fed dropped a hint that it is not in the mood for the US Fed rate cut until it is fully assured about the US inflation. So, the hawkish US Fed provided fodder to the US dollar, which rebounded from the two-month lows after the release of US Fed meeting minutes. This intensified FIIs' selling in the Indian stock market," said Avinash Gorakshkar, Head of Research at Profitmart Securities.

 

5. Sell India Buy China Complain

 Senior Research Analyst at SMC Global Securities, Seema Srivastava said- 

 

 VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said-

 

 

 

Conclusion

A set of circumstances including decreasing valuations and inflation issues contributed to the Indian stock market’s downward performance over the last six months. The aggressive policy of the US Fed coupled with foreign investors shifting from India to China has built even more pressure. Some attempts to recover have been made, but net selling continues to persist in mid and small-cap stocks. The Nifty 50 remains above a critical support level, but sentiments towards the market continue to remain pessimistic. Investors should exercise caution and track global movements for any changes.

 

Disclaimer: No buy or sell recommendation is given. No investment or trading advice it is. The data mentioned is of the Nifty 50 and Sensex on that day and month. The information presented is taken from various articles and content available on websites in the public domain. Market data and sentiments can change and vary. So always make investment-related decisions before consulting with a certified financial expert.