BSE Sensex dropped 3000 points in six days and opened lower today at 63,774: Key factors behind this decline
During morning trade today, the Indian stock market extended its losing streak to six straight sessions. The BSE Sensex opened lowers today at 63,774 and fell to an intraday low of 63,403 within a few minutes after the stock market's opening bell.
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For the last six days, the 30-stock index has been under selling pressure, falling from 66,428 to 63,403, losing roughly 3,000 points.
Today, the Nifty 50 opened down for the sixth day in a row, reaching an intraday low of 18,920 points, a loss of about 890 points. Similarly, the Bank Nifty index opened lowers today at 42,708 points and fell to an intraday low of 42,371 points, shedding roughly 2,000 points.
The wealth of stock market investors has also been impacted by this fall. Investors have lost more than Rs 20 lakh crore in the last six days.
The initial drop on Thursday alone reduced investors' wealth by much than Rs 5 lakh crore. It is worth noting that, as of the last trading session on Wednesday, the total market capitalization of the businesses listed on the BSE was Rs 309.22 lakh crore, which has fallen by Rs 5.54 lakh crore to Rs 303.68 lakh crore at the time of writing the report. In the last six days, investors have lost a total of Rs 20.14 lakh crore.
Top reasons for this decline in stock market:
Israel-Hamas war
The conflict between Israel and Hamas. The scale of this battle is expanding all the time, and the risk of it affecting the entire Middle East is growing. The Israel-Hamas conflict has entered its 20th day, and no solution is visible at this time. According to Gorakshkar, the Middle East region's tension has created uncertainty in the minds of investors, resulting in panic selling across bourses.
Increasing price of crude oil
Because of the impact of the Israel-Hamas war on the Middle East, crude oil prices are constantly rising and stay above $90 per barrel. The market has been affected by the possibility of more increases in this.
Rising Inflation
The battle with other Middle Eastern oil producers is becoming more serious now that oil prices are above $90 per barrel. This needs to be closely watched, especially in light of the global economy's "higher for longer" interest rate scenario.
Rising oil prices raise the cost of production for many industries as well as the cost of electricity for homes and companies, which raises the rate of inflation worldwide. Central banks' attempts to control inflation may be hampered by rising energy costs and emerging inflationary trends.
As a result, interest rate hikes by central banks worldwide will continue, slowing down the expansion of the world economy.
Selling of FIIs
Gorakshkar went on to say that FIIs have been consistently selling in the Indian equity market as the US currency has risen in recent weeks. In such a case, they may be relocating their money from emerging markets to other assets such as gold, bonds, currency, and so on.
FIIs sold stocks worth Rs 17,396 crore between October 2023 and October 25th, 2023. FIIs sold4,236 crore worth of Indian shares on Wednesday.
Increasing US Treasury yields
In America, the 10-year bond yield has reached a 16-year high. It has previously surpassed 5% in 2007. Its impact is also obvious in the shape of a decrease in markets around the world, including the United States.
After reaching a record 16-year high of more than 5% on Tuesday, the 10-year US bond yield experienced some retracement, but it has been steadily rising since Wednesday and has now approached 5% levels, putting pressure on global markets, including Dalal Street, according to Gorakshkar.
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