The benchmark indices closed in the red on Thursday with the NIFTY 50 losing 145 points and closing at Rs 19,381.65. Moreover, the Sensex fell drastically by 542 points and closed at Rs 65,240.68.
Listed below are four factors contributing to the bearish behaviour shown by the Indian markets this week:
Rating Downgrade to the United States
The stock markets felt the selling pressure amid the conservative behaviour on a global level. Such moves from the investors are observed after Fitch, a well-known credit rating agency, downgraded the Issuer Default Rating (IDR) for the United States from AAA to AA+, and, further expects the ratings to go down in the coming years.
India, despite facing a bearish trend in the stock markets, got an upgrade from Brokerage such as Morgan Stanley and the reports suggest economic stability supported by strong capex plans and profit outlook.
Selling pressure in global markets
Apart from the factor mentioned above, the Indian markets primarily faced headwinds due to more and more selling pressure in the securities markets globally.
Profit booking transactions
Analysts have commented about the Domestic Institutional Investors (DIIs) also took an exit from the markets with a conservative mindset to avoid any potential losses due to the events taking place in the markets.
Bond Yields inching upwards
Another important parameter is with regard to the yields of the Indian Government Bonds which has seen an increase following the US counterparts which saw an increase above the levels estimated. As a result of the above, the US indices also faced the heat with NASDAQ and S&P500 index being in the red dropping more than one percent.
Written by Amit Madnani
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