Stock market today : Nifty50 and BSE Sensex , the Indian equity benchmark indices, tanked in trade on Tuesday a day after an over 3.5% rally. While Nifty50 went below 24,650, BSE Sensex was below 81,400. At 11:28 AM, Nifty50 was trading at 24,780.55, down 144 points or 0.58%. BSE Sensex was at 81,895.05, down 535 points or 0.65%.
Indian stock markets saw significant gains on Monday, with the Nifty index reaching a seven-month peak. Market watchers will focus on crucial inflation data due Tuesday, including India's CPI and the US Core CPI figures.
The aggregate market capitalisation of BSE-listed firms decreased by Rs 63,488 crore to Rs 432.16 lakh crore, according to an ET report.
Why is the stock market crashing today? Top reasons
1) Post-Rally Profit Taking
Following Monday's nearly 4% surge in Sensex and Nifty, primarily driven by ceasefire developments, investors opted to secure gains, resulting in a market correction. The swift increase in valuations within a brief period prompted caution amongst traders, leading to disposals in high-value shares.
"It is important to understand that yesterday's sharp 916-point surge in Nifty was not caused by institutional activity. The combined FII and DII buying yesterday was only Rs 2694 crores. This means the market surge was triggered by short-covering and HNI plus retail buying. This implies that institutional activity is likely to remain subdued in the coming days, which may constrain the continuation of the rally," said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
2) Shifting Global Trade Dynamics
The US and China's agreement to reduce tariffs and enhance economic cooperation has created a positive atmosphere for global investors. However, this development might not yield immediate advantages for Indian markets. Previous analyses suggested that extended US-China friction would encourage global manufacturers to diversify their production bases, potentially favouring India. This possibility has diminished with the improving relations between the two economic giants.
3) Crude Oil Price Movement
Oil prices reached a two-week peak on Monday, bolstered by improving global trade outlook. Brent crude increased to $64.74 per barrel, whilst WTI reached $61.77—representing over 5.5% growth in the past two weeks. Both benchmarks achieved their highest closing since April 28, gaining approximately 1.5% on Monday. The following Tuesday witnessed a slight decline of about 0.3%.
4) US Treasury Yield
The yield on US 10-year Treasury bonds increased to 4.457%, rising from 4.25% in late March. The heightened bond yields enhance the appeal of US investments for global investors, typically resulting in capital movement away from emerging economies such as India. This situation has created additional downward pressure on Indian equity markets.
5) Decline in Major Market Components
Leading stocks across banking, financial services, and information technology sectors pulled the market downward. The combined negative impact of HDFC Bank, Infosys, ICICI Bank, Kotak Mahindra Bank, TCS, and Reliance Industries resulted in a 502-point reduction in the Sensex.
The information technology sector experienced selling pressure following substantial gains on Monday. Despite Infosys recording nearly 8% growth and TCS achieving over 5% increase in the previous trading session, both companies registered losses on Tuesday.
(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)
Indian stock markets saw significant gains on Monday, with the Nifty index reaching a seven-month peak. Market watchers will focus on crucial inflation data due Tuesday, including India's CPI and the US Core CPI figures.
The aggregate market capitalisation of BSE-listed firms decreased by Rs 63,488 crore to Rs 432.16 lakh crore, according to an ET report.
Why is the stock market crashing today? Top reasons
1) Post-Rally Profit Taking
Following Monday's nearly 4% surge in Sensex and Nifty, primarily driven by ceasefire developments, investors opted to secure gains, resulting in a market correction. The swift increase in valuations within a brief period prompted caution amongst traders, leading to disposals in high-value shares.
"It is important to understand that yesterday's sharp 916-point surge in Nifty was not caused by institutional activity. The combined FII and DII buying yesterday was only Rs 2694 crores. This means the market surge was triggered by short-covering and HNI plus retail buying. This implies that institutional activity is likely to remain subdued in the coming days, which may constrain the continuation of the rally," said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
2) Shifting Global Trade Dynamics
The US and China's agreement to reduce tariffs and enhance economic cooperation has created a positive atmosphere for global investors. However, this development might not yield immediate advantages for Indian markets. Previous analyses suggested that extended US-China friction would encourage global manufacturers to diversify their production bases, potentially favouring India. This possibility has diminished with the improving relations between the two economic giants.
3) Crude Oil Price Movement
Oil prices reached a two-week peak on Monday, bolstered by improving global trade outlook. Brent crude increased to $64.74 per barrel, whilst WTI reached $61.77—representing over 5.5% growth in the past two weeks. Both benchmarks achieved their highest closing since April 28, gaining approximately 1.5% on Monday. The following Tuesday witnessed a slight decline of about 0.3%.
4) US Treasury Yield
The yield on US 10-year Treasury bonds increased to 4.457%, rising from 4.25% in late March. The heightened bond yields enhance the appeal of US investments for global investors, typically resulting in capital movement away from emerging economies such as India. This situation has created additional downward pressure on Indian equity markets.
5) Decline in Major Market Components
Leading stocks across banking, financial services, and information technology sectors pulled the market downward. The combined negative impact of HDFC Bank, Infosys, ICICI Bank, Kotak Mahindra Bank, TCS, and Reliance Industries resulted in a 502-point reduction in the Sensex.
The information technology sector experienced selling pressure following substantial gains on Monday. Despite Infosys recording nearly 8% growth and TCS achieving over 5% increase in the previous trading session, both companies registered losses on Tuesday.
(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)
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