The Indian stock market on Monday (13-June-2022) gave a shock to the investors. There was a huge fall of up to 3 per cent in all the major indices from the market, due to which investors lost more than Rs 7 lakh crore. On the other hand, the rupee, which has been running at a low level for the last few months, touched a new low of 78.29 as soon as the market opened today. Let us know why the stock market and rupee are becoming weaker continuously?
Inflation: The rising inflation in India as well as around the world is a matter of concern. Inflation in the US has reached its highest level in 40 years. Like India, America’s central bank Federal Reserve has announced to increase interest rates to control rising inflation, due to which the market is seeing a decline due to fear of reduced liquidity. Let us tell you, in the last two months, due to inflation, the Reserve Bank of India had also increased the interest rates by 0.9 percent.
Weak Global Signals: The main reason for the decline in the stock market is the continuous weakness signals from the international markets. On Friday, all the main indices of the US stock market had fallen up to 2.73 percent, after which there has been a big decline in the markets around the world.
Rise in fuel prices: After the Russo-Ukraine war around the world, gas prices have increased along with crude oil. In the last four months, the price of oil has increased by 40 percent while the price of gas has more than doubled. Experts believe that due to the high cost of fuel, oil importing countries like India will have to spend more on crude oil than before. Due to this, expenditure on development plans can come down and the GDP growth rate can also come down.
Investors leaving money from developing countries: Due to the increase in the price of oil and the fear of reduction in GDP growth rate, big investors are continuously selling in the stock markets of developing countries like India. In June itself, Foreign Institutional Investors (FIIs) have sold Rs 14,000 crore. Due to this, due to the demand for dollars in India, pressure is also being seen on the rupee.
CPI Data: The government is going to release the inflation data for the month of May on Monday (June 13, 2022). According to a Reuters survey, experts expect the Consumer Price Index (CPI) to remain at 7.10 per cent in May, up from 7.7 per cent in April.
Let us tell you, NSE’s main Nifty 50 had reached the lowest level of 15,683 during the day’s trading, which is very close to this year’s lowest level of 15,665.