The recent fall in the Indian stock market, with indices like Nifty 50 and BSE Sensex registering significant losses, is driven by a combination of global and domestic factors. One key reason is the anticipation surrounding the upcoming US Federal Reserve meeting. Uncertainty about whether the Fed will cut interest rates by 25 or 50 basis points is causing investors to take a cautious approach. This uncertainty has led many to book profits, exacerbating the selling pressure in the market.
Additionally, after a long rally of about 14 days, the Indian market entered an overbought phase, prompting profit booking from traders. The rebound of the US dollar due to revised inflation data and weak job reports in the US has also contributed to the market’s decline. The rise in the US dollar index over recent sessions has led to foreign portfolio investors (FPIs) pulling out funds from emerging markets like India, adding to the sell-off pressure.
In the broader global context, concerns over a potential US recession and mixed economic data have heightened uncertainty in the financial markets, further influencing market movements in India. Despite the downturn, experts note that this is largely a correction phase, and the long-term outlook for the Indian market remains strong.