Indian Stock Market Faces Sell-Off Amid Multiple Concerns

The Indian stock market opened higher today but soon faced a significant sell-off. The Nifty 50 index fell below the key support level of 24,200, reaching an intraday low of 24,054, a drop of 2,223 points from its record high of 26,277. Market experts believe that a combination of factors, both domestic and international, is contributing to the decline.

Why is the Indian Stock Market Falling?

Stock Market Holiday in the US

The Indian stock market had seen gains yesterday due to the positive performance of the US stock market. However, today the US stock market was closed for a holiday, which meant there were no global cues for the Indian market. Mahesh M Ojha, AVP — Research at Hensex Securities, explained that the lack of international triggers could have led to profit-booking in the Indian market despite a strong opening.

FII's Selling

Another factor affecting the Indian stock market is the continued selling by Foreign Institutional Investors (FIIs). According to Mahesh M Ojha, FIIs were net sellers in November, and Domestic Institutional Investors (DIIs) have not been buying at the same pace they did earlier. This lack of buying support is making it harder for the Indian market to hold higher levels.

Anticipation of Union Budget 2024

DIIs are also cautious due to the upcoming Union Budget 2024, which is just two months away. Investors are waiting for clear signals from the government, especially after their victory in the Maharashtra Assembly Election. This uncertainty is keeping DIIs on the sidelines, leading to less participation in the market.

Rising US Dollar

Anshul Jain, Head of Research at Lakshimishree Investment and Securities, pointed out that the strong US dollar is causing investors to shift their money from stocks and gold into the bond and forex markets. As the US dollar strengthens, FIIs continue to sell in the Indian market, adding pressure to stock prices.

Geopolitical Tensions

The Indian stock market had bounced back in the past few sessions following news of a ceasefire between Israel and Hezbollah. However, the geopolitical situation has now been discounted by investors, and focus has shifted back to the ongoing Russia-Ukraine war. This renewed tension is contributing to the selling pressure in the Indian stock market.

Is This Just Profit-Booking?

While the market is facing a significant downturn today, experts believe this may be a case of profit-booking rather than a long-term trend. If the Nifty 50 index manages to close above the crucial support level of 24,050, the current decline could simply be a temporary pullback before the market stabilizes.

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