Explainer: Why is there a big drop in the stock market? Not only in the United States, but also in China, these are also the main reasons.

The stock market is witnessing a fall for the third consecutive day. Since Tuesday, the Sensex has seen a fall of around 1.70 per cent i.e. over 1,400 points. Many people consider the poor economic data from the US and China to be the reason behind this fall. Both the reasons are behind this decline. But these two reasons are not the only important reasons behind the fall in the stock market. The important reason behind this fall is the high valuation of the stock market. Due to which selling is done by investors. Before Wednesday, the stock market had seen rises for 14 consecutive days.

On the other hand, the fall of the rupee and the strengthening of the dollar index are again creating pressure on the stock market. The rupee is at a record high of 84 rupees against the dollar. The Indian rupee is considered one of the weakest currencies in Asia. In such a situation, this is also an important reason for the fall of the stock market.

In addition, sales by foreign investors are clearly visible in September. The effect of this is also clearly visible on the market. Inflation figures will be released next week. The figures for August will not be the same as those seen in July. The most important factor will be food inflation, which remains at a consistently high level. Let us also discuss with you all the reasons for the stock market decline…

These are the main reasons for the fall of the stock market

1. Accounting for profits on the stock market: Before the selling started in the Indian stock market on Wednesday this week, the market was bullish for 14 days. Currently the stock market seems to be overvalued. Due to which investors in the market are looking at profit booking. Seema Srivastava, Senior Equity Research Analyst at SMC Global Securities said that there was excessive buying in the Indian stock market. Therefore, the current sell-off should be taken as profit booking only.
2. Rupee Fall: On the other hand, the Indian rupee is trading with a huge drop against the dollar. Currently, the rupee is hovering around the level of 84 against the dollar. This is also one of the reasons for the decline in the stock market. In the last 15 days, the rupee has lost 0.13 percent. If we talk about the current year, the rupee has seen a drop of 1 percent.
3. Dollar Index Improves: On the other hand, the dollar index is improving. However, over the past month, it has fallen by 2.12 percent. At the same time, the dollar index has fallen by about 4 percent over the past year. According to experts, the dollar is trying to recover. This is the reason why the stock market is experiencing a period of decline. According to the data, the dollar index is currently trading at the level of 101.
4. Indifference of foreign investors: On the other hand, in the last week or rather in the current month, the indifference of foreign investors is clearly visible. According to the data, on Thursday, foreign investors withdrew their money from the Indian stock market. A day earlier, foreign investors sold Rs 688.69 crore. However, in the current month, foreign investors have invested Rs 11,882 crore in the stock market.
5. US Federal Reserve Meeting: Avinash Gorakshkar, head of research at Profitmart Securities, said the main reason for the market’s decline is the uncertainty over the announcement of an interest rate cut at the US Federal Reserve meeting later this month. If the US Federal Reserve announces a 25 basis point rate cut, the market will not be happy with this decision. A 50 basis point reduction can breathe new life into the stock market.
6. US Employment Data: Avinash Gorakshkar of Profitmart Securities said US job creation fell to a three-and-a-half-year low in July, leading to a slowdown in the US labour market. A period of decline is being witnessed across all stock markets around the world, including India.
7. Fear of inflation in the United States: Fears of a slowdown in the US labour market have once again raised fears about inflation in the country, which could force the US Federal Reserve to reconsider its decision to cut rates. Even if they continue with their dovish stance, the market fears that the US Fed’s rate cut will not exceed 25 basis points.

Huge stock market crash

There is a major fall in the stock market since Friday morning. Sensex has fallen by 1,055.88 points during the trading session. According to BSE data, the stock opened in the morning with a slight fall to 82,171.08 points and touched the lowest level of the day at 81,145.28 points. While in the last three days Sensex has seen a fall of more than 1,400 points. On the other hand, a fall is also seen in Nifty. Nifty has seen a fall of more than 300 points during the trading session. Currently, Nifty is trading at 24,858 points with a fall of 288 points.