Indian Benchmark Indices were on a bearish tone from the past couple of trading sessions with the Sensex dipping 2,563.25 points (3.42 percent) in the last five trading sessions and closing today at 72,404.17.
In addition, the Nifty 50 index, keeping the timeframe the same, reduced by 833.15 points (3.66 percent) and closed at 21,957.50. Listed below are some of the factors that caused such an aggressive and consistent dip in the Indian Benchmark Indices:
Sale of stake by FIIs
In April 2024, Indian equities witnessed a Foreign Portfolio Investment outflow totaling ₹8,671 crores, as reported by the National Securities Depository Limited (NSDL). Overall, FPI outflows for the month totaled ₹16,260 crores, which included equities, debt, hybrid, and debt-voting Rights (debt-VR).
In May 2024, the FIIs, till now, are selling heavily as they remained net sellers in all the trading sessions. They sold shares worth ₹15,863 crores in the ‘cash’ segment till Thursday while the FIIs have sold shares worth ₹5,292 crores in the F&O segment.
Underperforming Q4 results
Q4FY24 results have gone without any surprise and failed to trigger extra buying on Dalal Street. Discounting the Q4 results ahead of the actual announcements, the investors are currently booking profits causing negative sentiments in the share prices.
Lok Sabha Elections
The Indian stock market already discounted the Lok Sabha polls and currently is in the ‘overbought’ condition hence premature profit booking has been triggered the Dalal Street.
Hawkish US Fed
Hawkish talks by some US Fed officials enabled the US dollar rate to rebound thereby putting extra pressure on the Indian currency and the stocks. Rising US dollar prices have fueled the US Treasury yield too making the investors switch their money from equity and other assets to currency and treasury markets
Rising VIX Index
The continuous rise in the Volatility Index (VIX) has also put doubt among the fresh buyers in the Indian markets. As India VIX Index has had a history of climbing during Lok Sabha Elections, the volatility is expected to pick up further as we are just in the middle of the same and will continue till the close of the poll results date.
Written by Amit Madnani
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