Why has Indian stock market fallen for third day in a row?

India’s stock market continued its downward spiral on Friday (January 10).

The Sensex at one point was down nearly 600 points in early trade, while the Nifty too declined.

Both indexes somewhat pared back their losses.

This is the third straight day India’s stock market has been down.

But what happened? And why has India’s stock market plunged for the third day?

Let’s take a closer look:

What happened?

As per India Today, the Sensex touched a low today of 77,099.55 in early trading.

The Nifty too declined 150 points to touch 23,376.25 in the early going.

As per Business Today, banking shares, Reliance Industries Ltd, Mahindra & Mahindra Ltd and NTPC Ltd were all in the red today.

On the whole, the market was heavily red with just one positive stock for every six stocks in the negative.

Two hundred and twenty  stocks hit their lower circuit limits.

The fear gauge India VIX hit the 15 level.

However, the Sensex recovered some of its losses by later afternoon to hit 77,375.07.

The Nifty too clawed back some of its ground to touch 23,430.

NTPC Ltd declined 2.54 per cent to Rs 312.15, while IndusInd Bank, UltraTech Cement, Power Grid, Axis Bank Ltd, Sun Pharma and State Bank of India each dropped up to 2 per cent.

Maruti Suzuki India, Mahindra & Mahindra, ICICI Bank and Tata Steel were also down.

Shares of Tata Consultancy Services (TCS) jumped nearly 5 per cent on Friday morning to Rs 4,288.

This, after IT firm reported an 11.95 per cent jump in December quarter net profit to Rs 12,380 crore.

Tech Mahindra, Infosys, HCL Tech and Wipro were also in the positive territory.

Why is the stock market down again?

There are a number of reasons including Donald Trump set to take over as US president, uncertainty about the plans of the US Reserve Bank and Foreign Institutional Investors (FIIs) continuing to sell.

“In the context of the looming uncertainty regarding President Trump’s likely actions, the market is unlikely to rally in the near-term. There appears to be no respite to the sustained FII selling which touched Rs 7170 crores yesterday. This will continue to put pressure on the market,” VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, told Business Today.

Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, told India Today, “Uncertainty around US Federal Reserve rate plans and President-elect Trump’s policies continues to fuel market pessimism.”

As per Livemint, investors are also being careful given ahead of the December quarter (Q3) earnings.

Experts say they are hopeful that Q3 earning will rebound after two straight weak quarters.

However, experts warn that there may be no outright recovery, and a clear revival may only come from Q4.

“The correction can be attributed to continuous FPI selling, rising dollar, rising crude, the start of result season on a cautious note, Trump assuming office in the US and its potential policy impacts shortly,” Manish Jain, director, Institutional Business (Equity & FI) Division at Mirae Asset Capital Markets, told Livemint.

With inputs from agencies

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