Stock Market Crash: What led to the fall?
After Adani’s imbroglio, it was expected, but the stock market crash in India came too soon. Sensex saw a fall of 900 points on Wednesday, while NIFTY broke its support at 17600. The support level is below which the index or share should ideally not fall. But, once the support level is broken, it becomes difficult to predict where and how bad the downfall can be.
While NIFTY had closed at 17554.30, Sensex had closed at 59,744.98. Both these are a low level for both the indexes and one of the lowest this month. The disappointment is evident because this fall comes just a few months after NIFTY and SENSEX had made some highs.
The crash led to panic in the market as people saw a dip in their earnings and increased losses.
There are a multitude of factors that are leading to such a fall in the market-
US Equity
The Indian stock market does reflect the situation in the US equity market. As Nasdaq and Dow Jones saw a fall, the Indian markets reacted in the same way.
It is believed that with the Fed signalling more rate hikes, it is bound for the market to react negatively, and the indexes will fall further.
Tech Layoffs
As the overall industrial sentiment weakens and tech companies are still seeing massive layoffs in light of an uncertain future, it is expected that the stocks of tech companies will fall, leading to an impact on the overall market fall.
Read more- Adani’s Brother, Vinod Adani is the ‘centre of financial flows’: Hindenburg Report
RBI Monetary Policy
With the monetary policy of RBI remaining in tightening mode and an ‘uncertain trajectory,’ inflation is still at its peak. With global cues making it difficult to fight inflation, the market is expected to take a hit until this issue is somewhat stabilized.
Thursday Expiry
With Thursday being the expiry date for F&O, the Wednesday market remained volatile.
Russia- Ukraine War
With the Russia and Ukraine war continuing with no end in sight, the markets have reacted to it. Russia has also announced that it is ready to resume nuclear tests and suspend the nuclear arms control treaty with the US, with this tension continuing to build.
With the future being uncertain, Investors should remain cautious and play it safe.
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