Nifty 50, Sensex drop about 1% each. Why is Indian stock market down today? — explained with 5 crucial reasons

Stock market today: Following weak global Asian stock markets after a trend reversal by the Central Bank of Japan, the Indian stock market witnessed sharp selling pressure during Tuesday deals. The Nifty 50 index opened below the psychological 22,000 mark and went on to touch an intraday low of 21,817 mark, logging an intrada loss of 238 points or more than one percent dip against Monday’s close of 22,055 level. The BSE Sensex opened around 300 points lower at the 72,462 level and went on to touch an intraday low of 72,007 mark, logging around one percent dip on Tuesday’s session. The Bank Nifty index also witnessed selling pressure and lost around 0.50 percent during intraday deals. The broad market also witnessed high selling pressure as the small-cap index lost around 1.15 percent while the mid-cap index corrected more than 1.50 percent on Tuesday.

Why Indian stock market is falling today?

On why the Indian stock market is falling today, stock market experts said that the dip in the US Fed rate cut buzz ahead of the FOMC meeting, and trend reversal by the central bank of Japan has hit global sentiments, especially the Asian stock market. Apart from this, weakness in the broad market, income tax planning ahead of the end of the current financial year, and the soaring US dollar are other reasons that have dragged the Indian stock market today.

Here we list out the top 5 reasons that have dragged the Indian stock market today:

1] Trend reversal by Bank of Japan: “After a gap of 17 years, the Bank of Japan has scrapped its negative interest rate policy. While announcing the unwinding of its aggressive monetary easing programme the central bank of Japan changed short-term interest rates from -0.10 to between 0-0.10 percent. This has triggered selling pressure in the Asian stock markets, except the Nikkei,” said Avinash Gorakshkar, Head of Research at Profitmart Securities.

2] FOMC meeting: “Buzz for the US Fed rate cut has been hit badly after the hotter-than-expected US inflation data and PPI print last week. So, the market is expecting the announcement of further continuation of the higher interest rate in the upcoming US Fed’s FOMC meeting. This is a negative development for assets other than the US dollar and US Treasury yield,” said Saurabh Jain, Vice President — Research at SMC Global Securities.

Mukesh Kochar, National Head of Wealth at AUM Capital said, “The last-minute release and the various data points suggest a clear hold case for now. The last 2 inflation data points have been slightly higher than expected and various statements from the Fed officials suggest that they want to wait longer until they get assurance of direction of inflation towards 2%. It is important to look at the guidance the Fed gives during this meeting for the rest of the year. We expect the Fed to start cutting rates by 2nd half of the year. However, incoming data on inflation and employment numbers will be the key to deciding how early the rate cycle can reverse.”

3] Income tax planning: Avinash Gorakshkar of Profitmart Securities went on to add that generally in March, investors rejig their portfolio ahead of the Income Tax Return (ITR) filing. Some people do profit-booking while some indulge in loss harvesting to contain their income tax outgo.

4] Weak Asian markets: “After the announcement of trend reversal by the Bank of Japan, selling pressure is visible in the Asian market that has turned the global sentiments cautious. This selling in the Indian stock market can be attributed to this weakness in the Asian stock market, especially in the Hang Seng,” said Avinash Gorakshkar.

5] Weakness in broad market: Avinash Gorakshkar of Profitmart Securities said that weakness in the broad market is also not allowing the Indian market sentiments to improve. He said that in the last one month, the mid-cap index has corrected more than 5.60 percent while in March 2024, the situation is more alarming. Likewise, the small-cap index has crashed by around 10 percent in the last one month.

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