Stock Market Crash: The Indian stock market witnessed a steep decline on Wednesday, November 13, with major indices like Sensex, Nifty, and Bank Nifty closing with significant red candles. Sensex plunged by around 984 points, Nifty dropped 324 points, and Bank Nifty saw a substantial fall of 1069 points. This stock market crash has investors questioning the reasons behind this bloodbath and whether it’s a natural market correction, foreign institutional investors’ (FPI) selling pressure, or other factors at play. Let’s analyze.
Reasons Behind Stock Market Fall Today
Rising Dollar Prices and Weakness in Indian Rupee
Following Donald Trump’s victory in the 2024 U.S. Presidential election, the dollar surged, rising by a total of 1.8% in November alone. This dollar appreciation has put pressure on global markets, including India’s, contributing to weakness in other currencies, especially the Indian rupee. The Indian rupee hit a record low of 84.40 against the U.S. dollar on Wednesday, losing another paisa. This rupee weakness is driven by strong foreign outflows and the rising dollar, which impacts returns on investments for foreign investors.
Selling Pressure from Foreign Portfolio Investors (FPIs)
Another significant factor behind this bloodbath in stock market is the sustained selling by Foreign Portfolio Investors (FPIs). For over 30 consecutive trading sessions, FPIs have been in selling mode, particularly in Indian markets, causing a relentless sell-off in major stocks since October. This consistent selling pressure from FPIs has fueled large red candles on key indices.
Unmet Expectations of Rate Cuts by RBI
As global central banks, including the U.S. Federal Reserve, are lowering rates, Indian investors also anticipated similar action from the Reserve Bank of India (RBI). However, the RBI’s decision to keep rates unchanged has added to investor uncertainty, especially as food prices rise due to prolonged monsoon and crop damage, further heightening inflation concerns.
Breaking of Support Levels and Rising Retail Fear
Both Nifty50 and Sensex were trading close to their support levels; however, early selling pressure broke these support points, triggering fear among retail investors. This breakdown has intensified the sell-off, leading to further declines in the stock market as investor confidence took a hit.
What’s Next? Investors Brace for Potential Market Volatility
The probable factors mentioned above—rising dollar, FPI selling pressure, anticipated RBI rate cut, weakening rupee, and breaking of support levels—are influencing the current market downturn. With the stock market experiencing continuous selling pressure over the past month, investors may want to monitor their investments closely and stay updated on market trends. Whether this is a short-term correction or if the market will stabilize in the coming sessions remains to be seen.
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