On Thursday, once again sharp selling was seen in the Indian stock market. Within three hours of the start of trading, the Sensex fell by more than 800 points to below 71,800, while the Nifty 50 also fell by more than 300 points to below the level of 22,300. This sudden decline increased the concern of investors. Due to weakness in the market, the total market cap of companies listed on BSE decreased by about ₹ 8 lakh crore. After all, what was the reason that such a huge panic broke out in the market within a few hours?
Concern increased due to RBI’s strict stance
The latest decision of RBI is one of the biggest reasons for the decline in the stock market. The central bank has increased the repo rate for the first time in three years. With this, RBI changed its policy stance from neutral to calibrated tightening. This means that strict steps can be taken in the future to control inflation. This has increased concerns among investors about interest rates.
US bond yields increased pressure
There has also been a sharp rise in US bond yields amid the selling of bonds in global markets. The 30-year US bond yield reached above 5.71%, while the 10-year yield stood at 5.3% and the 2-year yield stood at around 4.9%. Bonds may become more attractive to investors as yields rise. In such a situation, the pressure to withdraw money from the stock market increases.
Crude crossed 102 dollars
Increasing tensions in the Middle East have also pushed crude oil prices higher. Brent crude crossed $102 per barrel. India imports a major part of its crude oil requirement. In such a situation, expensive oil can increase inflation and costs of companies. This also affects the market sentiment.
Continuous selling by FII
Selling by foreign investors has also increased pressure on the market. According to NSE data, FIIs sold Indian shares worth more than Rs 6,121 crore on Wednesday. With this, their total selling in nine consecutive trading sessions reached around ₹ 57,000 crore. FIIs have been net sellers in 20 out of 25 trading sessions since the beginning of September. That means there is pressure in the domestic market from both global and domestic fronts.
Also read- Global economic situation may worsen further, RBI may increase repo rate by 0.50% in December: SBI report
SK Sharma is a content writer who writes on news, entertainment, and lifestyle topics. She has over four years of experience and is known for conveying information in simple and clear language.
