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Stock Market Crash: Sensex Nifty at the lowest level of the year, 5 lakh crores of investors drowned, these are 5 big reasons for the fall

Photo:FILE

stock market

Highlights

  • Sensex down 1,045 points at 51,570 and Nifty down 300 points to close at 15,386
  • The second major fall within a week is indicating the deepening of the bearish gap.
  • Fear of growth and constant selling of FIIs is a big challenge before investors

Indian stock market seems to be falling in the trap of recession. Both the benchmark indices Sensex and Nifty fell to 52-week lows on June 16. The trend of decline in the market continues for the last five sessions. After the Fed results, the market started with a gain of 600 points, but later the decline increased and finally the BSE Sensex fell 1,045 points or 1.9 percent to 51,570 and Nifty50 fell more than 300 points to close at 15,386. This is the lowest level in the last one year.

Sensex

Image Source : FILE

Sensex

The second major fall in the market within a week is showing signs of deepening the bearish gap. Breaking the all-important level, both the indices of the stock market have reached a 52-week low today. In India, amidst rising inflation and declining growth projection, the market is expected to dominate the slowdown. In such a situation, rising oil prices, inflation concerns, growth apprehensions and continuous FII selling will be a big challenge for investors.

What are the 5 main reasons for the decline

1. Rising interest rates in the US

The US Federal Reserve on Wednesday raised expectations by 75 basis points (bps), the biggest increase since 1994. You would say that the market already knew this, and the market has already corrected it. But last night the Fed has indicated further rate hikes to contain inflation. Which has had a negative impact on the market sentiments. And Sensex Nifty collapsed at 52 week low

2. Decline in global markets

With the Federal Reserve raising interest rates, the Bank of England is also under pressure to raise interest rates. Due to which the markets around the world are registering a decline. Germany’s DAX fell 2 per cent, Britain’s FTSE 1.4 per cent and France’s CAC 1.6 per cent. Hong Kong’s Hang Seng closed with a fall of more than 2 per cent. China’s Shanghai Composite (down 0.6 per cent) and Australia’s ASX 200 (down 0.15 per cent).

3. Fear of Global Recession

Experts said that developed economies are raising interest rates fearing a slowdown, due to which the market will see further decline. According to experts, supply disruptions coupled with rising oil and commodity prices are indicating a slowdown in developed economies, which could have an impact in India.

4. Strong selloff by foreign investors

The movement of the US Fed to increase the interest rate is having a bad effect on the Indian market. The data shows that foreign investors have sold equities worth Rs 1,92,104 crore so far this calendar year. This includes FPI shares worth Rs 24,949 crore sold so far in June. The Fed raised short-term interest rates by 50 basis points at its May 4 meeting. The increase followed an increase of 25 basis points in March 2022.

5. Uncontrollable Oil Prices

Fears of a recession in the US have deepened after the Fed’s rate hike. This has pushed oil prices to their peak. At the same time, the Russian war also does not seem to be over for the time being. International benchmark Brent crude futures were trading at $119 a barrel at the time of writing this article, while US crude oil prices rose 0.4 percent to $115.8 a barrel. Rise in oil prices due to Ukraine-Russia war remains a major concern for equity markets and experts say they will remain so at least till the end of this calendar year.

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Shivam Bangwal

Shivam Bangwal is an Indian based entrepreneur who is a tech, travel and coding enthusiast with a post graduation degree on Master's of Computer Applications. He is a founder of Youthistaan, People News Chronicle, Hitchhike TV, Branding Panther and many more.
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