The Indian stock markets saw a huge decline on 7 August today. The Sensex fell to 550 points during trading. At the same time, the Nifty slipped below 24,400. US citizen Donald Trump’s announcement to increase tariffs on Indian goods and frequent selling by foreign investors influenced the notion of investors. All sectors also remain in red mark. The biggest decline was seen in capital goods, metal, services and industrial and commodity shares. At around 10:30 am, the Sensex was trading at 436.61 points or 0.54% to 80,107.38. At the same time, the Nifty was trading at 141 points or 0.57% to 24,433.20. The Nifty saw the biggest decline in the Nifty like Adani Ports, Tata Motors, Kotak Mahindra Bank, Tata Steel, NTPC and Eternal. There were 3 main reasons behind today’s decline in the stock market-
1. American tariff’s double attack
The biggest shock to the stock market was when US President Donald Trump increased the tariff on Indian goods to 50%. Trump said that despite all his warnings, India has been buying oil from Russia, due to which this additional tariff is being imposed on it. Earlier this tariff was 25%, which has now been doubled. The Government of India has termed the US move as “unfair, unjust and impractical”. Trump’s decision is expected to have the most impact on areas such as textile, sea products and leather exports, which export to the US on a large scale. Mahesh Patil, Chief Investment Officer of Aditya Birla Sun Life AMC, said in a conversation with Reuters, “If these tariffs apply, it will affect trade flow and pressure economic growth. This may also cause a short -term shock to the stock markets.”
However, Santosh Meena, the research head of Swastik Investmart, says “There is no new negative news at the moment. The 20 -day window is still open to negotiate with America. The US trade delegation is coming to India on August 24, causing some extent to break the market.” Meena further said, “The market move is quite delicate at the moment. On one side Trump’s aggressive tariff and the June quarter disappointing results on the other side have negatively impacted the morale of investors.”
2. FII’s frequent selling increased concern
Foreign institutional investors (FIIs) have been continuously withdrawing money from the Indian stock market for some time. A day earlier on Wednesday, he sold shares worth Rs 4,999.10 crore. So far in August, he has withdrawn Rs 10,954.49 crore. Earlier in July, he had withdrawn around Rs 47,600 crore from the Indian stock market. Because of this, the stock market remains volatility and weakness.
3. Rose in crude oil prices
Meanwhile, Brent crude oil prices rose by 1% to $ 67.56 per barrel on Thursday. This is a great concern for the oil importing country like India, because it will increase the import bill of the country and increase the pressure on inflation. This has a direct impact on the market perception.
4. India Vix boom, apprehensions increased
The market volatility index ‘India VIX’ rose nearly 2% to 12.16 on Thursday. This index measures uncertainty in the market and the nervousness of investors. Analysts believe that the bounce in the VIX shows that investors have become cautious and are adopting alert strategy given global uncertainty.
What do technical experts say?
According to Anand James, the main market strategist of Geojit Financial Services, weakness in the stock market has not stopped permanently. He said, “Although the recent lower levels are not very low, the formation of a continuous lower level is an indication that the recession is dominating the market.” He said, “The Nifty may fall from 24,080 to 23,560. Recovery can be expected only when the Nifty crosses 24,590, and will require a decisive brakeout for any strong improvement.
