Black Monday on D-Street! Reason for the market fall.

Many Indian investors were hoping for a fresh begining to the weak with some strong comeback after last week stock market debacle. However, the market took an u turn of the expectation and nose dived. The market tumbled more 800 points in the day trading. All sectoral indices ended in the red, with most logging losses of nearly 1 percent. Ny portfolio too saw some whopping downfall. Last time it was INR 13k, and this time it was well above INR 20k. Over all in last 7 trading session I have incurred a huge loss of INR 100k in my portfolio.

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There are various reasons that accounts to such a huge loss. After summing up differrnt news portal, here are the key Reasons for Market Drop today ;

1. Strong US Jobs Data :

• The US unemployment rate fell to 4.1%, with strong job growth.
• This indicates a strong recovery in the economy.
• A strong economic recovery reduces hopes for Fed rate cuts.
• Reduced hopes for rate cuts, along with tightening global liquidity, are not good for the stock market.

2. FPI Selling Pressure:

• A strong recovery in the US economy might force selling in developing economies like India and redirect investment to US markets.

• This is exacerbated by rising US bond yields.

• Concerns over high valuations in the Indian market, combined with poor GDP growth, add to the selling pressure.

3. Crude Oil Surge :

• Oil prices hit a 15-week high due to new US sanctions on Russia.
• India is an oil-importing country, so higher oil prices increase import costs.
• These increased costs are often passed on to citizens, leading to inflation.
• Inflation is generally not favorable for the stock market.

4. Rupee Weakness :

• The rupee fell to Rs 86.27 per dollar, a lifetime low.
• A weaker rupee increases import costs, as India is a net-importing country.
• This, again, contributes to inflation, which negatively impacts the stock market.

The market is in extreme fear mode.

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This is the time when the long term investor feel quite safe. Many are upset about the market dip, and I feel a bit sad too. But I’m not worried, Here’s why:

• Panic Selling Locks Losses. If the company’s fundamentals are strong, staying calm often rewards you when markets recover.

• The Art of Doing Nothing, Sometimes, the best strategy is to do nothing. Let time do its magic.

• Think Long-Term, our portfolio is like a marathon runner. It needs patience and steady effort, not quick decisions.

So, when markets fall, relax and let our investments work quietly.

In good faith - Peace!!

Posted Using INLEO