A huge decline is being seen in the Indian stock market today. Sensex closed down by 930 points and Nifty by 303 points. Many stocks saw a decline of about 5. Among the Sensex top 30, only ICICI Bank, Nestle India, and Infosys saw a slight rise. Shares of the remaining 27 companies closed in the red.
With today’s decline in the Indian Share market, investors lost wealth worth 9 lakh crores. Smallcap and midcap indices have fallen by 4 percent. Let us know what is the reason for this tsunami in the Indian market.
Weak quarterly results of companies in the stock market
The valuation of the Indian market and many companies is quite high. But, the results of many companies do not justify their valuation. Bajaj Auto, Kotak Mahindra Bank, and RBL Bank are examples of this. The shares of all these saw a huge decline after the quarterly results. Investors were also not happy with the quarterly results of Reliance Industries.
Foreign investors selling
Foreign Portfolio Investors (FPIs) are continuously selling in the Indian stock market. So far in October, FPIs have withdrawn a record Rs 82,479 crore from Indian equities. Earlier in March 2020, during the COVID-19 pandemic, FPIs sold Indian shares worth Rs 65,816 crore. However, this loss is being compensated by Domestic Institutional Investors (DII) buying, but it still seems insufficient.
High valuation of the Indian stock market
The valuation of the Indian stock market is also quite high. This is the reason why foreign investors are turning to markets like China and Hong Kong, which are relatively cheaper. The Chinese government has also announced a financial stimulus package. Also, the central bank there has also cut the policy interest rates. This is making the Chinese stock market even more attractive for investment. At the same time, the Indian market seems to be in a state of flux.
Weak signals from global stock markets
Very weak signals were also received from global markets. Talking about the US market, out of the three major indexes, only one closed in the green on Monday. At the same time, Asian markets like Japan and South Korea also saw a decline of more than 1 percent today. This also weakened the sentiment of the Indian stock market. However, the stock markets of China and Hong Kong, with whom India has a rivalry, closed in the green.
