The Indian stock market extended its losing streak for the third consecutive session on Friday, September 6, 2024. This happened amid uncertainty surrounding the upcoming US Fed meeting and overbought conditions. The Nifty 50 index plunged to an intraday low of 24,879. It lost around 400 points. The BSE Sensex touched an intraday low of 81,304. It logged an intraday loss of 867 points.
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What’s Driving the Downward Trend?
According to market experts, the continuous fall in the Indian stock market can be attributed to a combination of factors. Here are the top five reasons:
- Uncertainty around the US Fed meeting: The upcoming US Fed meeting has created uncertainty. This has led to a sell-off in the Indian stock market. Investors are cautious about the potential interest rate cut announcement and its impact on the global markets.
- Overbought conditions: The Indian stock market had rallied for 14 days, leading to overbought conditions. This has resulted in profit-booking, contributing to the current sell-off.
- Rebound in US dollar rates: The US dollar has gained strength after a revision in the US inflation average. This has led to a bounce back in the US dollar index. This has fueled demand in forex, treasuries, and bonds, impacting the Indian stock market.
- Weak global market trends: Global market trends have been weak. US tech giants like Tesla and Alphabet reported weak quarterly numbers. This has led to a sell-off in global markets, including India.
- Selling by FIIs and DIIs: Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) have been selling their positions. This has contributed to the downward trend in the Indian stock market.
Expert Insights
- “The major reason for the market fall is the uncertainty over the interest rate cut announcement. This announcement is expected in the upcoming US Fed meeting. Investors are cautious. They are offloading their long positions to insulate themselves from any potential hiccups post-US Fed meeting.” – Avinash Gorakshkar, Head of Research at Profitmart Securities.
- “The Indian stock market was overbought, and the current selling should be taken as a mere profit-booking.” – Seema Srivastava, Senior Equity Research Analyst at SMC Global Securities.
- “The rebound in US dollar rates has fueled demand in forex, treasuries, and bonds, impacting the Indian stock market.” – Anuj Gupta, Head of Commodities & Currencies at HDFC Securities.
Conclusion
The Indian stock market is experiencing a correction due to a combination of factors. These factors include uncertainty around the US Fed meeting, overbought conditions, and weak global market trends. Investors are advised to remain cautious and take a wait-and-watch approach until the US Fed meeting outcome.