Indian markets fell sharply as global tensions, rising crude prices and mixed foreign investor flows hurt sentiment. |
Mumbai: The Indian stock market saw heavy selling on Friday morning. The Sensex fell over 600 points, or 0.80 percent, touching an intraday low of 81,620. The Nifty 50 dropped more than 200 points, or 0.90 percent, to 25,272. Mid and small-cap stocks also declined by up to 1 percent.
Due to the fall, investors lost over Rs 3 lakh crore in wealth. The total market value of BSE-listed companies slipped to below Rs 465 lakh crore from Rs 468.5 lakh crore in the previous session.
Here are five simple reasons behind the fall:
Geopolitical tensions
Uncertainty around global politics is hurting market sentiment. US-Iran talks ended without a clear deal. US leaders have warned that Iran remains a serious threat. This has increased worries about possible tensions in the Middle East, making investors cautious.
Crude oil above USD 71
Brent crude oil is trading above USD 71 per barrel. If tensions rise in the Middle East, oil supply could be disrupted, pushing prices higher.
Higher oil prices are negative for India because the country imports most of its crude. Expensive oil can weaken the rupee, increase inflation, and impact government finances.
Foreign investors’ mixed trend
Foreign Institutional Investors (FIIs) have started buying Indian shares in February after months of selling. However, they are still booking profits. On February 26 alone, FIIs sold shares worth Rs 3,466 crore. So far this month, they have bought Rs 896 crore worth of stocks.
High valuations and a weak rupee near the 91 mark are making foreign investors cautious.
Profit booking in key sectors
Banking, auto, metal and FMCG stocks saw strong profit booking after recent gains. Experts say the market has been moving in a narrow range for three months. It is currently a stock-picker’s market, meaning only select stocks are performing well.
Q3 GDP data awaited
Investors are also waiting for the December quarter GDP data. SBI expects growth of around 8 percent, while economists estimate about 7.4 percent. Though growth is likely strong, weaker nominal GDP numbers are worrying investors.
Disclaimer: This report is based on market data and expert views. The Free Press Journal does not provide investment advice. Investors should consult certified financial advisors before making any investment decisions.