Stock Market Today: Amid uncertainty ahead of the upcoming US Federal Reserve meeting, the Indian stock market extended its losing streak for the third consecutive session on Friday. In early trade, the Nifty 50 index opened lower at 25,093 and fell to an intraday low of 24,879, shedding around 400 points. During this sell-off, the index also breached the critical 25,000 mark.
Meanwhile, the BSE Sensex opened with a downward gap at 82,171 and reached an intraday low of 81,304, recording a loss of 867 points within minutes of the market opening. With this decline, the 30-stock index has lost approximately 1,250 points over the last three sessions.
Why is the Indian Share Market Falling?
According to stock market experts, the ongoing decline in the Indian share market can be attributed to two primary factors: uncertainty surrounding the upcoming US Federal Reserve meeting and overbought conditions on Dalal Street. Additionally, the rebound in US dollar rates following a revision in US inflation averages, weak US job data, and flat jobless claims have contributed to the market’s downturn over the last three sessions.
Here are the top five reasons dragging down the Indian stock market:
1. US Fed Meeting: “The major reason for the market fall is the uncertainty over potential interest rate cuts in the upcoming US Fed meeting this month. If the Fed announces a 25 bps rate cut, the market may not react positively, whereas a 50 bps or higher cut could boost markets globally. Many investors, unwilling to take risks, are offloading long positions to shield themselves from potential post-meeting volatility,” said Avinash Gorakshkar, Head of Research at Profitmart Securities.
2. Overbought Condition: “Before the sell-off triggered on Wednesday, the Indian stock market had seen a 14-day rally. This created an overbought scenario, and the current selling should be viewed as a simple case of profit-booking,” said Seema Srivastava, Senior Equity Research Analyst at SMC Global Securities.
3. Rebound in US Dollar Rates: “Following a revision in the US inflation average last week, the US dollar saw value buying on Wednesday, pushing the US dollar index back up after hitting 7-month lows near the 100 mark. The index is now around 101, reflecting a 1% gain over the last three sessions, which has driven demand for forex, treasuries, and bonds,” explained Anuj Gupta, Head of Commodities & Currencies at HDFC Securities.
4. US Job Data: “US job openings in July have dropped to a three-and-a-half-year low, indicating a slowdown in the US labor market. This has impacted global markets, including Dalal Street,” said Avinash Gorakshkar of Profitmart Securities.
5. US Inflation Concerns: “The slowdown in the US labor market has reignited fears of inflation, which could make the US Fed reconsider a rate cut. Even if the Fed maintains a dovish stance, the market fears that the rate cut may not exceed 25 bps,” added Profitmart Securities.
Stocks to Buy Today:
Amid the market downturn, Seema Srivastava of SMC Global Securities suggested focusing on sectors like banking, infrastructure, power, FMCG, and pharma for value picks.
Srivastava recommended the following stocks to buy during the crash: IPCA Labs, City Union Bank, Bajaj Consumer, Amara Raja Energy, and PNC Infra.
Disclaimer: The views and recommendations in this article are from individual analysts. They do not reflect Mint’s views. Investors are advised to consult certified experts before making any investment decisions.
