share market crash:
On January 21, 2023, the Indian stock market’s performance was quite alarming. There was a downturn of over one percent in both Nifty and Sensex. The amount of 5 lakh crores was lost in a short span of one day. Nifty decreased to 23,127.70, which is a drop of 217.05 points. Along with it, BSE Sensex also registered a fall of 848.65 points, which is approximately 1.1%, and the final figure was 76,224.79. There was also a decline in the value of realty and consumer stocks. The index for fear in India, VIX, registered an increase of five percent suggesting significant fear in the stock market.
what were the 5 main reasons behind this tdecline:
1. Trump’s 100% tariff threat.
Donald Trump’s stance on the BRICS nations has created heightened anxieties within the stock market. There has been a suggestion by Trump that he can impose a hefty 100% tariff on the countries who try to pull away from US dollars. There is an argument to suggest that because India is a member of BRICS, they will also be affected and this creates more doubt in the market.
2. Worse than expected quarterly returns.
Companies published results for their December quarter and the statistics released were mixed which has contributed to this concern.
Shares of Dixon Technologies reported a decline of net profit and revenue and thus, the share price fell over 14%. Zomato shares faced a decline of approximately 9 % while Oberoi Realty shares also faced monitored submission of around 7.6%. These results raised concerns about growth in major sectors and also dampened investor confidence.
3. Possibility of Increase in Interest Rates in Japan .
Interest rate hikes by the Bank of Japan have caused more nervousness in global markets. The hikes, which seem to be on the card may lead to increased cost of borrowing and reduction of liquidity and create an impact on emerging markets.
4. Foreign Investor Sell Off.
The foreign institutional investors (FIIs) have continued to pull out money from the Indian market. On 20th Jan, he sold stocks amounting to Rs 4336.54 crore and in this month date he has sold stocks to the tune of Rs 50,912.60 crore. This is one of the important reasons for market pressure and decline.
5. Uncertainties About Fiscal Budget An Ahead Of Time.
The sentiment in the market remains one of concerns over the forthcoming Budget 2025.
Investors tend to prefer caution as they wait and see how the budget will be announced. In the opinion of Chit Jain from Motilal Oswal Financial Services, the drop in the stock market has resulted in an increase of over 5% in the India VIX index which can be interpreted as increased uncertainty within the market
