Indian stock markets have been on a downhill drive since the last few trading sessions. On Wednesday, the share market-BSE Sensex and NSE Nifty-slumped for the sixth straight session and a similar outcome is expected at the end of Thursday's trading session as well.
At the time of writing this article, BSE Sensex was down over 230 points, trading at 37,558.20. Nifty, on the other hand, just managed to stay above 11,300-mark.
On Wednesday, Sensex had slipped almost 500 points to 37,789 while Nifty shed 138 points to close at 11,359.
There are several factors that are dictating terms on Dalal Street. Some of the issues that have triggered the recent slump include ecalating trade war, foreign fund outflows, poor earnings and unpredictability over elections results.
Having said that, here are five detailed points about issues triggering panic in the stock markets
This is probably one of the biggest factors affecting the stock markets around the globe. The nervousness in global markets, which was first triggered by US sanctions on importing oil from Iran, aggravated further as US President Donald Trump vowed to double tariffs on additional Chinese goods worth $200 billion. The fresh escalation between the two largest economies in the world has spooked most stock markets around the world. Further escalation in trade tensions between the US and China could even take a toll on the India rupee.
Another key reason behind renewed market uncertainty is the increase in foreign fund outflow. Simply put, foreign investors are exiting the Indian stock market. Be it due to the Lok Sabha elections, global liquidity situation or economic slowdown, foreign investors seem jittery about the prospect of investing in the India stock market. After pouring in around Rs 9,000 crore into the stock markets last year, foreign investors have now offloaded Indian shares over Rs 700 crore on a provisional basis. This factor has contributed majorly to the losses witnessed in the Indian stock market.
This is another factor that is believed to have taken a toll on Dalal Steet. There has been a slowdown in Indian economy for the financial year 2018-19 due to a slowdown in the growth of private consumption, a moderate increase in fixed investment and declining exports. The details disclosed by the latest report released by the Ministry of Finance also suggest that the real GDP growth has seen a decline as well.
With just two phases left in the Lok Sabha elections, markets participants turned extremely nervous. Many large caps which were initially predicting a win for the Narendra Modi-led government are not so sure about the outcome anymore-a key reason why the mood of the market has dampened. Considering the fact that the equity market loathes disruption, a change in governance may is not a good development.