Mumbai: In the morning trading session on May 27, Indian stock market benchmarks Sensex and Nifty faced significant intraday losses after 2 days of consistent gains. The Sensex was down by 900 points, while the Nifty 50 fell below 24,750 due to a range of factors.
Both the benchmarks have dropped by 1% on May 27. Collectively, the market cap of all listed companies has declined by Rs. 2.56 lakh crore.
Here are five reasons attributed to the fall of the Sensex and Nifty.
- Sluggish Foreign Capital Inflow: In May, many FPIs have sold Indian equities due to a lack of positive cues for growth. Till May 26, FPIs have bought only Rs.135.98 crore in Indian equities.
- Slowing Q4 Earnings: Even though the markets rallied for the past 2 days, the Nifty50 and Sensex earnings growth has declined 6% year on year, lower than market expectations. Even though the Sensex has gained 10,000 points since April, the current market valuations require stronger corporate performance to sustain the momentum.
- Weak Performance of Asian Markets: Equity markets across Asia have declined due to global trade uncertainties. China’s Shanghai Composite dropped by 0.33%, Japan’s Nikkei 225 and Hong Kong’s Hang Seng fell by 0.15%, which also mirrored the market sentiments in India. US President Donald Trump’s decision to postpone a 50 percent tariff on European Union imports has pushed Asian investors and businesses to reassess trade risks.
- RBI’s record dividend didn’t match expectations: Even though the RBI announced a record Rs.2.69 lakh crore dividend payout to the central government, this fell short of market estimates which had hoped for a figure closer to Rs.3 lakh crore.
- The RBI has also revised its contingency reserve range to 6-7.5% from 5.5-6.5%, limiting its ability to pay a larger dividend.
- Profit Booking Tendencies: Post Operation Sindoor, both the Sensex and Nifty gained 4.1%. In the two weeks after the ceasefire, the market cap of BSE-listed companies increased by Rs.28.4 lakh during this period. This sharp uptick prompted investors to book profits at higher valuations. Why
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Readers should conduct their own research or consult with a qualified financial advisor before making any investment decisions.
