Why has Indian stock market been falling for five straight sessions? (2024)

The Nifty Bank index has been under selling pressure for the last seven straight sessions, losing 1900 points. According to the astute observations of our esteemed stock market experts, the ongoing Lok Sabha elections, FIIs' selling, bounce back in the US dollar rates, hawkish US Fed fueling treasury yields, unimpressive Q4 results 2024 season and rising India VIX Index are some of the primary reasons that have been dragging the Indian stock market downwards.

Also read: Sensex crashes over 1,000 points lower, Nifty 50 settles below 22,000

Why is the stock market falling?

Speaking on the reasons for the drag on the Indian stock markets, Saurabh Jain, Vice President of research at SMC Global Securities, said, "There are combinations of reasons that are dragging Indian indices together. Ongoing Lok Sabha polls, continuous selling by FIIs, not so impressive Q4 results season, hawkish US Fed and rising VIX India Index can be attributed as one of the major reasons weighing on the Indian stock market these days."

Also Read: Gold price dips ahead of Akshaya Tritiya on hawkish US Fed. Opportunity to buy?

Why share market fell today? Top 5 reasons

1] Lok Sabha elections: "The Indian stock market has already discounted the victory of BJP-led NDA in the ongoing Lok Sabha polls. Now, the Indian stocks are in overbought condition and hence premature profit booking has triggered on Dalal Street. But, the selling is visible in the frontline large-cap stocks only. We are seeing bottom fishing in the broad market as the small-cap and mid-cap indices shot up on Thursday and outshined the frontline indices," said Avinash Gorakshkar, Head of Research at Profitmart Securities, providing a balanced view of the situation.

2] FIIs' selling: "FIIs are selling heavily this month as they have remained net sellers on all sessions in May 2024. They have sold out Indian shares worth ₹15,863 crore in the cash segment till Thursday while the FIIs have sold out shares worth ₹5,292 crore in the Future & Option (F&O) segment," said Avinash Gorakshkar of Profitmart Securities.

3] Hawkish US Fed: "Hawkish talks by some US Fed officials recently have put extra pressure on the Indian stocks. After witnessing some profit booking early this month, such statements enabled the US dollar rate to rebound. Rising US dollar prices have fueled the US Treasury yield as well. So, investors are expected to switch money from equity and other assets to currency and treasury markets," said Saurabh Jain of SMC Global Securities.

4] Non-impressive Q4 results 2024: Saurabh Jain added that the current Q4 results for the 2024 season have gone without any surprise. This also failed to trigger extra buying on Dalal Street. "As the market had already discounted the Q4 results 2024 ahead of the quarterly results season, investors are booking profit now as the season is about to end next week," said Saurabh Jain.

5] Rising VIX Index: "The continuous rise in the VIX Index has also put doubt among the fresh buyers, who are shy of pumping money in the current volatile market. As India VIX Index has a history of climbing during Lok Sabha elections and we are just in the middle of general elections 2024, the volatility is expected to pick up further as we come close to the poll results date," said Avinash Gorakshkar of Profitmart Securities.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, and not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circ*mstances may vary.

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Published: 09 May 2024, 11:14 AM IST