Stock market crash: The key benchmark indices of the Indian stock market extended their losing streak for the second straight session on Tuesday. The Nifty 50 index opened lower at 22,732 and touched an intraday low of 22.569 within a few minutes of the Opening Bell. While hitting this intraday low, the 50-stock index lost around 571 points in the last two straight sessions.
The BSE Sensex today opened lower at 72,633 and touched an intraday low of 72,064, logging more than 1800 points loss in two straight sessions. Likewise, the Bank Nifty index opened on the lower side at 54,283 and hit an intraday low of 53,785, clocking around 1800 points loss in two successive sessions.
Why is the market falling today?
According to stock market experts, rising bond yields across the world, elevated crude oil prices, buzz about a weak earnings season, a weak Indian Rupee, and buzz about the fast-approaching high-interest regime.
Rising bond yield across the world
Pointing towards the money shift angle, Avinash Gorakshkar, Founder of Avinash Mentor Research, said, “It’s not that only the US bond yield is soaring. It is soaring globally. The US 10-year bond yield has crossed 5%, the highest since 2007. Likewise, the Japanese 10-year bond yield is at a 1996 high, and the French 10-year bond yield is at its highest since 2008.”
Gorakshkar said that investors are shifting their money from equities and other assets to bonds, as they offer better returns.
Crude oil price at an elevated level
Pointing towards the side effect of crude oil price rise post-US-Iran war, Amit Goel, Chief Global Strategist at PACE 360, said, “Crude oil prices sustaining at the elevated levels have renewed the fear of inflation, which is expected to put pressure on the Indian government, as they import around 85% of the domestic demand for crude oil. So, crude oil price sustaining at the higher levels is negative for the growth of the national economy, as higher inflation enhances fiscal deficit.”
Buzz for weak earnings season
Amit Goel of PACE 360 said that higher inflation squeezes industrial margins because companies will have to pay more for raw materials. Apart from this, their logistics expenses are expected to rise due to higher crude oil prices. So, lower industrial margins are expected to hit companies’ balance sheets. So, the market is expecting a weak earnings season due to the prolonged US-Iran war.
Weakness in the Indian Rupee
Pointing towards the weakness in the Indian National Rupee (INR), Anuj Gupta, a SEBI-registered market expert, said, “Weakness in the Indian Rupee is one of the major reasons, which triggered US Dollar (USD) outflow from India more than a year ago, and it is still on. Weakness in the Indian Rupee leads to depreciation in the income of FPIs and FIIs. As the Indian Rupee went past 96 against the US Dollar during the early morning session on Tuesday, the FIIs and FPIs are not going to pause their outflow.”
Fast-approaching high-interest regime
“After the 25 bps US Fed rate hike, pressure is on the RBI to raise interest rates in India as well. Now the market is estimating an additional 25 BPS US Fed rate hike, which hints at the global economy moving towards a high-interest-rate regime, as we saw during the COVID-19. This is expected to squeeze the liquidity from the markets, a scenario where a market becomes an ideal sell-on-rise market,” said Sandeep Pandey of Basav Capital.
Nifty may touch the 21,000 levels
Speaking on the major support levels for the Nifty 50 today, Amit Goel of PACE 360, said, “The immediate support for the Nifty 50 today is 22,500 to 22,300 range. On breaking below this support on a closing basis, it may open the probability for the next support placed at 21,000.”
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