Sensex crashes 600 points, Nifty 50 drops below 25k today. Why is Indian stock market falling for 3 consecutive weeks?
Indian stock market benchmarks—the Sensex and the Nifty 50—have been in a downtrend for three consecutive weeks now, with the Nifty 50 slipping below the key support level of 25,000. Over the past three weeks, the Sensex has tumbled more than 2,400 points, or nearly 3 per cent, while the Nifty 50 has also declined by around 3 per cent.
On Friday, July 18, the Nifty 50 fell almost 1 per cent to an intraday low of 24,925.25, while the Sensex crashed over 600 points to an intraday low of 81,628.26.
The mid and small-cap segments, which have outperformed benchmarks over the last few sessions, also witnessed a sell-off on Friday; the BSE Midcap and Smallcap indices dropped by almost a per cent each during the session.
Why is the Indian stock market falling?
Here are five key reasons behind the fall in the Indian stock market:
1. Weak Q1 earnings
The early trends of Q1 results have dashed the hopes of a significant earnings revival this quarter. After weak earnings in FY25, experts expected healthy earnings growth and upbeat management commentary in Q1. However, Q1 results so far have been unimpressive, and management has been cautious amid global uncertainty, which is weighing on market sentiment.
“Global uncertainty and a muted start to the Q1 earnings season are weighing on investor sentiment, even though sustained liquidity inflows are helping to cushion the downside,” said Ajit Mishra, SVP of research at Religare Broking.
2. Elusive India-US trade deal
There is no dearth of media reports about an imminent trade deal between the US and India. However, the wait for a final deal continues.
According to a Bloomberg report, India is seeking a more favourable tariff rate than Indonesia and Vietnam as it races to meet the August 1 deadline.
A lingering uncertainty on the tariff front is keeping investors cautious.
“A resolution or positive progress on tariff negotiations, especially with the US, could eliminate a major overhang and restore investor confidence,” said Rahul Ghose, the founder and CEO of Octanom Tech and Hedged In.
(This is a developing story. Please check back for fresh updates.)
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