Stock Market Crash: Indian stock markets declined sharply on Tuesday 11 February. The Sensex and Nifty fell by 1.5 percent during trading. This is the 5th consecutive day when both index are trading in red mark. Small and medium shares were destroyed. BSE midcap and smallcap index fell to 3.5 percent. Even all the sectoral index were trading in the red mark.
In the afternoon trading, the Sensex fell about 1,200 points or 1.5 percent to 76,100. At the same time, the Nifty lost about 350 points or 1.5 percent to below 23,000.
Market experts say that there are 7 major reasons behind this decline of the stock market-
1. Uncertainty about Donald Trump’s tariff policy
The main reason behind the recent decline in the stock market is uncertainty about the tariff policy of US President Donald Trump. Trump has decided to increase the tariff on the import of steel and aluminum, which has again aroused the possibility of a new trade war at the global level. Trump has increased the tariff on aluminum from 10% to 25%. At the same time, 25% tariff was rejected on steel, which could first enter the US without any fee. He also canceled the exemption given to countries like Canada, Mexico and Brazil. Investors suspect that this decision will increase pressure on international trade and may lead to more instability in global stock markets.
Dr. VK Vijaykumar, Chief Investment Strategist of Geojit Financial Services, said that this policy of Trump can weaken steel and aluminum prices for a long period. This may cause a sharp decline in India’s metal stocks.
2. Indian rupee weakness
The Indian rupee reached a record low of Rs 88 against a dollar on Monday, which has weakened the morale of the investors. Sovilo Investment Manager LLP fund manager and co-founder Sandeep Aggarwal said that there is a big reason behind the recent decline in the stock market. When the Indian rupee is weak, the real earnings of foreign institutional investors (FIIs) decreases. Due to this, they start withdrawing money from the Indian market fast. “
3. Foreign investors continuously selling
Foreign investors have so far withdrawn around Rs 12,643 crore from the Indian stock market in February Mahata alone. Due to this, there is constant pressure in the market. Earlier in January, he also sold a huge selling of Rs 87,374 crore. Sandeep Aggarwal said that until the Indian rupee does not get stability, it can continue selling.
4. Weak quarterly results
The weak results of the December quarter of Indian companies have also disappointed investors. Eicher Motors shares fell by 7 percent today, as the company’s profits and margins were less than expected in Q3. Similarly, the shares of Escorts Kubota also broke up to 5.3%, as the company presented a cautious attitude for the next quarters.
5. Pressure in global markets
Donald Trump’s decision to increase tariffs also saw a decline in global stock markets today. Hong Kong’s Hang Seng index declined by 0.3 percent. The S&P 500 futures also declined by 0.2 percent. Euro Stocks -50 futures also declined. Meanwhile, the US dollar has strengthened and the price of gold has also increased. In this uncertain atmosphere, investors have increased towards safe bases of investment like gold.
6. High valuation of midcap and smallcap stocks
There is a concern in the market about the high valuation of midcap and smallcap stocks. The Chief Investment Officer of ICICI Prudential AMC, S. Naren, has advised investors to completely get out of smallcap and midcap shares. He said that the valuation of these shares is quite high, which cannot be justified in any way.
7. Auto, realty and pharma sector declines
The all -round decline in auto, realty and pharma stocks also put pressure on the stock market today. Especially the weakened quarterly results of companies and increasing apprehensions regarding futures growth further intensified these declines. Investors’ interest in real estate sector is also decreasing.
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