Today, the Sensex dropped by 2,600 points, and the NIFTY-50 fell below the 24,000 mark, resulting in approximately ₹15 lakh crore losses! Border disputes between India and China accounted for the geopolitical risks. Market volatility increased as the India VIX moved by 49% to 21.31, causing fear among investors. Let’s check Why share market falling today.

Key Facts

• Political uncertainty due to state elections in Uttar Pradesh and Gujarat impacted investor confidence.
• Regulatory concerns over capital gains tax policies caused fear among investors.
• Rising global commodity, crude oil, and metal prices raised inflationary pressures on Indian companies.

Why share market falling today?

Market Speculation

• Heavily stock sell-off of Adani Ports, Bharat Forge, HDFC Life Insurance, and SBI resulted due to market volatility despite positive earnings reports. An increase in non-performing assets (NPAs) in public sector banks reached a record high of 8.7% by June/2024. Furthermore, the rising cost of capital due to RBI’s rate hike to 6.5% leads to higher borrowing costs. Hence, affecting private investment prospects.

Government Policies Pushing Share Market Falling Today

• Delays in government infrastructure projects in road and transportation sectors raised questions about economic recovery. Uncertainty surrounding the implementation of new corporate governance, increased regulatory scrutiny, and crackdowns on insider trading cases by SEBI.

Overvaluation

• High valuations in small and mid-cap stakes and the NIFTY-50’s price-to-earnings ratio of 23.1, above its two-year average of 21.9, have questioned overpriced stocks. It is anticipated that defense and railway stocks are overvalued. Railway stocks like IRFC, RVNL, and IRCON dropped by 4-5%, causing Why share market falling today.

A Corporate Picture

• Indian companies’ first-quarter results failed to justify the correct evaluation of stocks. Hence, most of the stocks in IT, banking, and metals dropped. The NIFTY IT scale recorded the largest drop of 4.1% today since 17th/April/2024. Hence, NIFTY-50 fell below the moving average compared to the last 20 days.

Reduction in corporate earnings and its growth showed a negative trend of 2.5% for FY2024-25. The increase in corporate debt levels in infrastructure companies showed liquidity risks and debt repayment concerns. Hence, technical indicators and the bearish trend indicated weakening market sentiment.

Inflation Resulting in Share Market Falling Today

• Inflation reached 7.8% by July 2024, impacting consumer spending and corporate profitability expectations. The decline in household savings rate to 29.1% in Q1-2024 indicated reduced equity investment inflows. Hence, foreign portfolio investors sold huge stocks and withdrew funds from Indian equities!

The Indian rupee rolled back to an all-time low of 83.82 against the US $ due to the global sell-off resulting in capital outflows from local equities. Moreover, FDI inflows fell by 11.5% year-on-year as of June/2024, answering Why share market falling today.

Climate Changes Affecting

• Weather events, such as Cyclone Niko, negatively affected supply chains and production in the agriculture and manufacturing industries. Thus, it leads to lower earnings expectations. At the same time, poor monsoons and global warming affected Indian agricultural output and, ultimately, the overall economic growth.

Why Share Market Falling Today—The Final Verdict

Experts cautioned investors to await stabilization before making stock market investments. Technical support levels for the NIFTY are around 24,075. Further, the 50-day moving average is about 23,900. Hence, it caused potential further declines. However, potential opportunities exist in the healthcare, pharmaceutical, defense, auto, and consumer durable segments. Please like and subscribe to Financereview.org for daily finance news and stories.