Stock Market Crash: Key triggers that wiped out ₹13 lakh crore in three sessions
India’s equity markets have seen a drop for three consecutive sessions, as a multitude of factors are keeping markets on the edge.
The Nifty 50 index has declined over 550 points from the close of July 23, and closed below the 24,700 mark on Monday. The index has declined in four out of the last five trading sessions.
While the Nifty has struggled, the broader markets are no different. The Midcap index was down 2% last week, while the Smallcap index fell 3.5%. Both the indices continue to trade with losses.
Here are some factors that are keeping the markets under pressure:
Earnings Disappointments
The elevated earnings expectations on a low base have resulted in disappointment among investors that have reported results so far. The disappointments began from the IT stocks, and it is the Nifty IT index that has been the biggest contributor to the four weeks of drop that the Nifty has seen.
Even some of those results that have managed to meet street expectations, have been punished with extreme reactions to the downside.
Banking stocks like Axis Bank and Kotak Mahindra Bank have been the biggest contributors to the Nifty Bank’s fall, despite the resilience shown by HDFC Bank and ICICI Bank.
Trade Deal Uncertainties
The US has been on a deal signing spree since the last week, firstly with Japan, then with Indonesia and the Philippines and now the mega deal with the European Union, which was announced on Sunday night.
The Dow futures in response are surging, the US markets are at record highs, but clarity on a trade deal with India remains lacking.
However, the administration has still not ruled out the possibility of a mini trade deal before the August 1 deadline, which only has just over 72 hours to go.
Breaking of Key Technical Levels
The Nifty had to defend its 50-Day Moving Average on the downside, which it has failed to do so.
Having broken below the June swing low of 24,824, the next level on the downside of 24,703 was also broken.
That now brings the June 13 low of 24,473 into play, which is from where the market had reversed after the Iran-Israel attacks.