The budget’s focus on fiscal consolidation and deficit reduction has sparked concerns about a potential economic slowdown and reduced market liquidity.
Why Massive Fall in Indian Stock Markets Today : 1.Tax Changes:
Recent government measures to boost revenue have led to increased long-term and short-term capital gains taxes.
The long-term capital gains tax rose to 12.5% from 10%, and the short-term capital gains tax on certain assets jumped to 20% from 15%. These hikes have driven investors to book profits, intensifying selling pressure.
Why Massive Fall in Indian Stock Markets Today : 2. Extended Rally and Profit-Taking:
After a prolonged bullish phase, stocks reached peak levels, prompting a wave of profit-taking. Investors sold off their holdings at these highs, causing a widespread decline.
As prices hit new records, market participants reassessed valuations, adopting a more cautious stance and triggering further sales.
Why Massive Fall in Indian Stock Markets Today : 3.Overpriced Shares:
Many stocks in the Indian market have been trading at inflated valuations, increasingly difficult to justify based on fundamentals.
Elevated price-to-earnings (P/E) ratios and other metrics suggest numerous stocks are overpriced. To lock in gains, wary investors began offloading shares, contributing to the broader market downturn.
Why Massive Fall in Indian Stock Markets Today : 4.Options Market Influence:
The options market has significantly influenced recent movements.
A high concentration of call options at various strike prices forced market makers to hedge by selling underlying stocks, adding to the downward pressure as option expiry dates neared.
Why Massive Fall in Indian Stock Markets Today : 5.Rising India VIX Index
“The Indian volatility index, India VIX, has reached a new 52-week peak of 21.41 today, marking an increase of over 70 percent in just one month. Currently, the index is encountering resistance at the 22 level. Should it surpass this barrier, it might soon approach the 23 and 25 thresholds.
This surge has instilled apprehension on Dalal Street, resulting in notable sell-offs in the Indian stock market,” stated Sumeet Bagadia, Executive Director at Choice Broking.
The persistent rise in the VIX Index has created uncertainty among investors. Historically, the India VIX Index tends to climb during Lok Sabha elections, and with the general elections of 2024 underway, increased volatility is anticipated as the date for poll results approaches.
This potential escalation highlights the necessity for investors to remain alert and consider taking proactive steps.
Why Massive Fall in Indian Stock Markets Today : 6.Continuous Selling by Foreign Institutional Investors (FIIs)
Photo Courtesy :PTI
“Foreign Institutional Investors (FIIs) have been offloading shares extensively this month, having remained net sellers throughout May 2024. As of last Friday, they have sold Indian equities worth ₹24,975 crore in the cash segment and ₹11,279 crore in the Futures & Options (F&O) segment.
This persistent selling by FIIs, significant players in the Indian stock market, has played a major role in the market’s downturn,” explained Avinash Gorakshkar of Profitmart Securities.
Why Massive Fall in Indian Stock Markets Today : Non-impressive Q4FY24 Results
“The Q4 results for the 2024 financial year have not been surprising. The market had already factored in the Q4 results ahead of the earnings season, leading investors to take profits now as the season nears its end next week,” remarked Saurabh Jain of SMC Global Securities.
Why Massive Fall in Indian Stock Markets Today : 7.Strong US Dollar
“Following a sell-off in the currency markets, the US dollar has remained robust, staying above the 105 mark. This strength has stalled further declines in the currency and bond markets and has also triggered selling in the Indian equity market,” noted Saurabh Jain of SMC Global Securities.
Sector-wise Fall Percentage in Indian Stock Market Today
| Sector | Fall Percentage (%) |
| Technology | 3.27 |
| Healthcare | 2.98 |
| Financials | 2.75 |
| Energy | 2.50 |
| Consumer Goods | 2.40 |
| Real Estate | 2.15 |
| Utilities | 1.95 |
| Materials | 1.80 |
| Telecommunications | 1.75 |
| Industrials | 1.50 |
Fall Percentage of Each Index in Indian Stock Market Today
| Index | Fall Percentage (%) |
| BSE Sensex | 2.45 |
| NSE Nifty 50 | 2.32 |
| BSE Midcap | 2.12 |
| BSE Smallcap | 2.00 |
| NSE Nifty Next 50 | 1.88 |
| NSE Nifty Bank | 1.75 |
| BSE Auto | 1.68 |
| BSE IT | 1.60 |
| NSE Nifty IT | 1.55 |
| BSE Healthcare | 1.50 |
Disclaimer
The views and recommendations expressed in this analysis are those of individual analysts or broking companies and do not reflect the opinions of toptenplus.in. We strongly advise investors to seek advice from certified professionals before making any investment decisions, as market conditions can fluctuate quickly and individual circumstances may differ.