The Indian stock market experienced significant selling pressure during early morning deals on Friday. The Nifty 50 index opened lower at 22,433 and touched an intraday low of 22,217 within minutes of the opening bell, recording an intraday loss of over 1.20%. The BSE Sensex opened lower at 74,201 and touched an intraday low of 73,538, logging an intraday loss of over 1,000 points in the early morning session. The Bank Nifty index also opened lower at 48,437 and further declined to an intraday low of 48,161, recording an intraday loss of around 0.60%. All sectors were trading in the red, with IT, tech, auto, and telecom receiving the maximum beating in today’s bloodbath on Dalal Street.
The selling pressure was widespread, with the broad market witnessing more selling than the frontline indices. The BSE Small-cap index crashed over 2%, while the BSE Mid-cap index lost close to 2% during the early morning session. Patanjali Foods, Granules India, Aditya Birla Real Estate, Deepak Fertilisers, and Redington were among the top losers. However, shares of KEI Industries, Star Health and Allied Insurance Company, Polycab India, IEX, RR Kabel, and Coal India witnessed strong buying despite the stock market crash. By 12:30 PM, 84 BSE-listed stocks had touched the upper circuit, whereas 428 BSE-listed stocks were locked in the lower circuit. Additionally, 46 BSE-listed stocks had touched a 52-week high, while 774 BSE-listed stocks had touched a 52-week low.
*Reasons Behind the Fall*
According to stock market experts, the Indian stock market is falling for these five crucial reasons:
1. *Buzz about Weak Earnings by Indian Banks*: Avinash Gorakshkar, Head of Research at Profitmart Securities, mentioned that there is buzz that Q4 earnings of Indian banks are expected to come below market estimates. This has intensified selling in the Indian stock market, as the Q3FY25 earnings season was highly disappointing. Gorakshkar noted that 30% of the strength in the Nifty 50 index belongs to banking stocks, and this dip in the Nifty 50 and Sensex can be attributed to this buzz.
2. *DIIs Stuck at Higher Levels*: Gorakshkar also pointed out that FIIs are continuously selling in the Indian markets, while DIIs are not coming forward as they used to. A major reason for this is that DIIs are stuck at higher levels and are in no hurry to reposition themselves until they get a clear picture of the markets.
3. *MSCI Rejig*: Anshul Jain, Head of Research at Lakshmishree Investment and Securities, explained that the upcoming MSCI rejig is also a reason for the stock market crash. Trade volume may be affected after this rejig, impacting the inflow and outflow of money into particular stocks. DIIs and FIIs are expected to rebalance their positions ahead of the MSCI rejig.
4. *Rising US Bond Yield*: Gorakshkar believes that FIIs are continuously selling in the Indian market as they get better returns in the US bond market. They are switching their money into the US bond market after Donald Trump, the 47th President of the United States, was inaugurated. FIIs’ selling may not end until the tariff flare is around.
5. *FIIs Shifting Money from India to China*: VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stated that after Trump’s victory in the US presidential elections, the US market has been attracting huge capital inflows from the rest of the world. Recently, China has emerged as a major destination for portfolio flows. The Chinese president’s new initiatives with leading businessmen have kindled hopes of a growth recovery in China. Chinese stocks are available at attractive valuations, leading to the ‘sell India buy China’ trend among FIIs.
*Key Levels to Watch*
Anshul Jain of Lakshmishree Investment and Securities highlighted key levels to watch for the Nifty 50, Sensex, and Bank Nifty:
– *Nifty 50*: The index is close to 22,200 support. Breaching below this level on a closing basis would mean the frontline index heading for the next support placed at 21,750 to 21,800.
– *Sensex*: Immediate support is at 73,000. A decisive break below this support would mean the 30-stock index heading for the next crucial support placed at 72,000.
– *Bank Nifty*: Crucial support is placed at 47,800, which is expected to remain sacrosanct support for the frontline index.
Stay tuned for further updates on the Indian stock market and its developments.
