The NSE and BSE, two of India’s stock exchanges, have recently experienced a decline due to various essential factors, in short we can say that current time is very tough time for Indian Stock Market. There are so many issues that forcing NSE and BSE to go down.
One major issue is the capital outflow from foreign institutional investors (FIIs). Only in the first few days of October 2024 did foreign portfolio investors sell ₹30,719 crore worth of Indian stocks. Currently, markets like China offer more favorable valuations; therefore, this capital is being moved there. Here we are collecting information from different sources and providing you brief information.
According to Financial Express and some other new sources
US Federal Reserve’s Monetary Policy: Investor sentiment has been weakened globally due to the Federal Reserve’s indication of fewer interest rate decreases in 2025. This has reduced risk appetite and affected markets like India.
A stronger dollar and increasing yields on US bonds: As US bond yields rise and the dollar strengthens, investors flee emerging markets like India, looking for greater profits elsewhere.
According to NewsBytes,
Geopolitical Tensions: Escalating hostilities in areas such as the Middle East have heightened international economic uncertainty, which has caused investors to be wary of market volatility.
News from SRJ on Indian Stock Market
Regulatory Updates: The equity derivatives market is now subject to more stringent regulations enacted by the Securities and Exchange Board of India (SEBI). These laws include fewer weekly options contracts and an increase in the minimum trading value. While these regulations are in place to safeguard individual investors, they have also prompted some shifts in the market.
Business Profits: Stock price drops directly result from investors losing faith in big corporations’ Q2 earnings reports.
According to NewsBytes,
The NSE and BSE indices have recently declined due to these combined factors.
Is Indian Stock Market recovery imminent?
Numerous factors, including local legislation, investor sentiment, and international economic conditions, influence the likelihood of a stock market recovery. In brief, the following factors may have an impact on the speed of recovery:
When We Can Expect Successful Recovery In Indian Stock Market?
- A More Stable Global Economy: If geopolitical tensions and the global economy both begin to subside, investors may feel more comfortable putting money into developing economies like India’s.
- Foreign Portfolio Investors (FPIs) Might Come Back: If Indian Stock Market valuations improve, FPIs might help the markets.
- Economic Growth: The stock market may rebound faster in India because the country’s GDP growth is still more substantial than other major economies.
- Business Outcomes: The market can react favorably if corporate earnings reports for the third or fourth quarters are higher than expected.
- Policy Support: The Indian government and the Reserve Bank of India (RBI) could bolster market recovery via growth-oriented policies like rate reduction or fiscal incentives.
Difficulties in Recovery:
- Interest rates worldwide: If the Federal Reserve keeps interest rates high, foreign investors may be hesitant to invest in Indian stocks.
- Geopolitical Risks: Uncertainty and volatility might persist if hostilities or escalations in vulnerable areas continue or worsen.
- Inflation and Oil Prices: If the price of crude oil were to rise, it would have the potential to impact corporate profits and market sentiment by increasing inflation and increasing India’s import bill.
- Time to Recovery: Although there may be some short-term volatility, many analysts are optimistic about the medium—to long-term prospects for the Indian markets. If domestic and global variables come together positively, the recovery might start in the next two to three quarters.
Investors should focus on the long term and spread their money around to lessen the impact of market volatility.