Why is the Indian stock market falling for nine straight sessions? Explained with five crucial reasons

Stock market news: The Indian stock market has been under the sell-off heat for nine straight sessions. After bleeding for two successive weeks, Dalal Street has been trading red since early morning deals on Monday. The Nifty 50 index opened lower at 22,809 and touched an intraday low of 22,725, recording over 1,000 points loss in the last nine successive sessions. The BSE Sensex today opened with a downside gap at 75,641 and touched an intraday low of 75,294 within a few minutes, logging nearly 3,200 points loss in nine straight sessions. Likewise, the Bank Nifty today opened lower at 48,880 and touched an intraday low of 48,525 during Monday’s dealings, registering around 1,857 points correction in the recent sell-off on Dalal Street.

Why is the Indian stock market falling?

According to stock market experts, Dalal Street is under selling pressure due to five crucial reasons: economic uncertainty, weak Q3 results season, weak INR, FIIs’ selling, and fast-ending FY 24. They said that selling across segments is also a reason for continued weakness in the Indian stock market.

Stock market crash: Top 5 reasons

1] Economic uncertainty: “Several factors contributed to the market downturn, with sentiment being particularly rattled by U.S. President Donald Trump’s announcement of reciprocal tariffs on US trading partners,” said Puneet Singhania, Director of Master Trust Group.

2] Weak INR: “Weakness in the Indian National Rupee (INR) is putting doubts into the minds of domestic institutional investors (DIIs) and hence they are not coming forward to pare the losses incurred due to FIIs’ selling,” said Avinash Gorakshkar, Head of Research at Profitmart Securities.

Gorakshkar added that FIIs’ selling is across segments; hence, all segments have received a heavy correction in the last nine sessions. In fact, the broader market has received more beating than the frontline indices.

3] Disappointing Q3FY25 earnings season: “3QFY25 earnings season was disappointing, with single-digit PAT growth for the Nifty and BSE500. This triggered another round of downgrades, though less severe than in Oct-24. The markets remain volatile, with SMIDs selling off 15.6% since 1-Jan. We expect the market to stay under pressure through this quarter but to recover from 1QFY26 as earnings stabilize and global stresses ease. We see the Nifty in a buy zone at ~22.5k, with Discretionary, Healthcare, and Telecom our key OW sectors,” Seshadri Sen, Head Of Research And Strategist at Emkay Global Financial Services.

4] High valuations ahead of new FY: “The Nifty is now trading at a 1YF P/E of 19.3x, near its 10Y LTA. The savage correction in SMIDs has derated the Nifty MidSmallcap400 Index P/E to 30.1x (TTM), below LTA of 37.9x; individual mid and small-cap indices are trading below the LTA. The median PER of the SMID index has also fallen by 8.8% since 30-Sep-2024 to 30x. The percentage of BSE-500 stocks trading below 30x PER (TTM) has increased, from 30.4% on 30-Sep-2024 to 39.4% after the correction,” Seshadri Sen of Emkay Global said.

5] FIIs’ selling: “By the end of 14 February 2024 session, FIIs have sold out Indian stocks worth over ₹29,000 crore whereas the DIIs have bought Indian shares worth over ₹26,000 crore in the cash segment. This clearly indicates that DIIs are not in a mood of bottom fishing, which we usually witness post-Covid,” said Anshul Jain, Head of Research at Lakshmishree Investment and Securities.

Avinash Gorakshkar said that DIIs are not coming forward and buying heavily, which could be due to the fast-ending current fiscal year, as DIIs generally don’t buy ahead of the end of the financial year.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.