Why the Indian Stock Market Has Fallen for 9 Straight Sessions: 5 Key Reasons

The Indian stock market has been facing a continuous decline for the past 9 sessions, with both the Nifty 50 and BSE Sensex experiencing significant losses. The Nifty 50 hit a low of 22,725, while the BSE Sensex fell to 75,294, losing over 3,000 points. Experts attribute this prolonged sell-off to 5 crucial factors:

Economic Uncertainty

Market sentiment has been negatively impacted by global events, including fears of a trade war after US President Donald Trump’s announcement of new tariffs on US trading partners. This has increased anxiety in the market, contributing to the ongoing decline.

US Banks Moving Gold from London to New York

As a result of concerns over potential tariffs on gold exports from Europe, US banks are moving billions of dollars worth of gold to New York. This has caused investors to shift their focus from equities to gold, adding further pressure on the Indian stock market.

Disappointing Q3 FY25 Earnings

The third-quarter earnings for FY25 were disappointing, with weak profit growth in key indices like Nifty and BSE500. This led to downgrades and a sell-off, especially in mid and small-cap stocks, which have fallen 15.6% since the start of the year.

High Valuations Ahead of the New Fiscal Year

The Nifty is currently trading at a price-to-earnings (P/E) ratio of 19.3x, near its long-term average. While small and mid-cap stocks have seen a sharp correction, the overall market remains highly valued, which has raised concerns about a potential further decline.

Selling by Foreign Institutional Investors (FIIs)

Foreign Institutional Investors (FIIs) have sold over ₹29,000 crore worth of Indian stocks by February 14, 2024. On the other hand, DIIs (Domestic Institutional Investors) have been buying less, signalling a lack of confidence and a reluctance to invest heavily before the fiscal year ends.

This combination of global and domestic factors is contributing to the continued weakness in the Indian stock market.

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