Why is Indian stock market crashing continuously?

NT Bureau, Agencies

New Delhi: Falling for the fourth straight day, benchmark Sensex declined by nearly 425 points on Friday due to selling in auto, pharma and banking shares and relentless foreign fund outflows. In four trading days, the BSE barometer tumbled 685.8 points or 0.90 per cent while the Nifty declined 163.6 points. "A combination of negative factors such as relentless FII selling, falling rupee, expensive valuations and the US threat of reciprocating tariff levies continue to drive investors away from Indian equities. "In fact, local benchmarks under-performed both Asian and European indices, which logged significant gains.

Barring metals, the slump in domestic markets was led by weakness in banking, IT, telecom, auto, realty and oil & gas shares," Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said. Vinod Nair, Head of Research at Geojit Financial Services, explained that uncertainties around corporate earnings and trade risks are raising concerns about stock valuations. He added India is lagging behind Asian markets as foreign investors continue to pull money out of Indian equities in favor of China.

The domestic market continued to exhibit weakness, primarily influenced by investor concerns over the hawkish tone of the FOMC minutes, which signalled prolonged higher interest rates that could constrain liquidity in emerging markets, "Although the market has undergone a healthy correction, the uncertainties surrounding the gradual recovery of corporate earnings and tariff-related risks continue to cast doubt on valuation levels,'' Vinod Nair, Head of Research, Geojit Financial Services, said.

A FEW REASONS THAT CAUSED THE MARKET TO FALL

Foreign investors are selling Indian stocks, with Thursday’s data showing an outflow of ?3,311.55 crore.

The falling rupee and high stock prices are making investors wary.

Global trade worries, especially the US threat of new tariffs, added pressure.

The US Federal Reserve hinted that interest rates may stay high for a longer time, which could reduce money flow into markets like India.