Stock Market

Why market declines drastically today? – 27 Oct, 2023

The Indian equity markets faced a significant setback with the BSE Sensex and NSE Nifty plummeting by over 1.25%. The BSE Sensex dropped 825.74 points, or 1.26%, to close at 64,571, marking its largest single-day loss since July 1. The NSE Nifty also slumped by 260.90 points, or 1.34%, finishing at 19,281.75, making it the worst session for Nifty in over seven months.

Several factors contributed to the market decline today – 27 th Oct, 2023:

  1. Middle East Tensions: Rising geopolitical tensions in the Middle East due to the Israel-Palestine conflict created uncertainty, triggering a wave of selling pressure. Over 6,000 casualties on both sides and the potential for further regional involvement fueled concerns among investors.
  2. Rising US Treasury Yields: The 10-year US Treasury yield exceeded 5% for the first time in 16 years, indicating expectations of higher interest rates. This increase in yields has broader implications, affecting borrowing costs for households, businesses, and governments in the US and worldwide.
  3. Strong US Dollar: The US Dollar Index remained above 106, despite the US Federal Reserve’s dovish stance on interest rate hikes. This elevated US dollar value may have contributed to the market sell-off.
  4. Weak Q2 Results: Indian companies’ Q2 results disappointed the markets. Despite positive performances from some firms like ICICI Bank and Kotak Mahindra Bank, the results did not translate into increased stock buying interest. Additionally, weak quarterly numbers from companies like DMart fell below market expectations.

These factors combined to create a challenging environment for Indian equities, leading to significant losses and concerns about market stability.

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