Today i.e. on December 20, 2021, there has been a big decline in the Indian stock market. Both the major markets of India Sensex and Nifty have seen a fall of about 2%.
Talking about the last 1 month, Nifty has fallen 6% and Nifty Sensex has also fallen 6%.
Today we will see that what is the main reason behind this ongoing decline in the Indian stock market? Because of which the stock market has fallen so much.
Earlier, there was a tremendous boom in the Indian stock market. It had reached above 60000. We will see that in the coming time, according to experts, the Indian stock market will fall further or it may see improvement.
rising cases of corona virus
Governments and the World Health Organization around the world are worried due to the new variant omicron of the corona virus. Many governments of the world have started taking lockdown and other steps. Including travel restrictions. The impact of which is going to be visible on the economy of the world.
On the other hand, there is also concern around the world that how effective is the vaccine currently available on the new variant of the corona virus, omicron? This has created an atmosphere of fear in the stock market across the world.
If we talk about India, then more than 100 cases of Omicron variants have been registered here.
Due to this, the shares of companies related to travel companies, cinema hall company and hospitality listed in the Indian stock market have been seen going down. Most companies have seen a decline of 4 to 5%. Apart from this, some companies have seen a decline of up to 7%.
Liquidity tapering
In the initial phase of the corona virus, governments around the world had announced many relief packages to save their economy. Due to which the liquidity remained in the market. Due to which money started raining in the stock markets around the world. But now central banks and governments around the world have started banning it.
But now due to rising inflation, central banks around the world have decided to withdraw this liquidity. Banks around the world are worried about rising inflation. Because of this, central banks have accelerated the process of bond purchases even more.
After the Reserve Fed of America, Bank of England and Bank of Japan have also intensified the asset purchase program even more. Apart from this, the Bank of England has recently increased the interest rate by 15 basis points. Bank of England is the first global bank to take such a step.
Apart from this, the Federal Bank of America has also indicated through a statement that the interest rate can be increased continuously in the coming times. This increase may continue till the year 2023.
Because of this, an alternative will be generated with the investors. Where he can invest his money. In such a situation, big investors can invest their money in debt instead of equity. And if this happens, there could be selling pressure in the stock markets around the world. Due to which the Indian stock market may see even more decline in the coming time.
Due to both these reasons, a weak position is being seen in the stock markets around the world. Which may continue in the times to come.
Apart from this, all these steps have seen a decline in the stock markets around the world. In which the US Nasdaq Shanghai Japan and other stock markets are also seeing a decline.
Bad listing of IPO
Poor listing of IPO can also be one of the main reasons for the decline in the Indian stock market. Recently Paytm’s IPO was listed with discount.
Apart from this, IPOs like Shriram Properties Star Health were also listed on the Indian stock market with discounts. Due to this, the confidence of the investors in the Indian stock market has also decreased.
Apart from this, a lot of IPOs have been seen in the Indian stock market at this time. This had never happened before in the Indian stock market. Because of this, the stakeholders have diverted their money from the currently existing stock and put it in the IPO. Due to which sales pressure is also being seen.
Foreign investors are continuously selling
Due to all these reasons, foreign investors also remain net sellers in the Indian stock market. This has happened in the last 1 month. This trend can also be seen in the coming times. If banks around the world raise interest rates, this process could be even faster. Which can have a direct impact on the Indian stock market. Because a large stake in the Indian stock market has been bought by foreign investment.
What should you do as an investor now?
If you are an investor in the Indian stock market, then you should not invest your entire money in one go. Apart from this, one should invest in the stock market only in those companies which are based on quality and whose fundamentals are strong.
You should invest only in such companies whose financial position is very strong. And companies whose corporate governance is being seen well. Apart from this, the business is doing well. Outlook also remains positive.
If you have invested in a stock which is going through a lot of volatility, then your focus should be on keeping your original investment safe. Don’t fall into the trap of earning money very quickly. This can also cause you to lose your principal. Or it could be that it may take you a very long time to make a recovery.
