Why Share Market Crash: The Indian stock market faced a sharp decline today, November 28, 2024, with the Sensex plunging over 1,100 points to trade near 79,156.36, and the Nifty falling over 323 points, slipping below the 24,000 mark. This dramatic drop was primarily driven by declines in IT and auto stocks, including major players like Infosys, TCS, Tech Mahindra, and Mahindra & Mahindra, which fell over 2%.
Key Reasons Behind Today’s Market Decline
1. Impact of Trump’s Tariff Threats
The newly elected U.S. President, Donald Trump, has announced aggressive import tariff policies, including a 25% tariff on imports from Mexico and Canada and 35% on Chinese goods. These measures have created uncertainty in global markets, leading to a bearish sentiment. Indian IT stocks, which depend heavily on U.S. exports, were hit the hardest, with the Nifty IT Index falling over 2%.
2. Inflation and Interest Rate Concerns
The U.S. PCE Inflation Index rose to 2.8% in October, signaling potential future increases. With Trump’s tariffs expected to exacerbate inflation, uncertainty over further interest rate cuts has left investors cautious. A strong Dollar Index further added to the woes, particularly for IT companies reliant on U.S. markets.
3. Weak Global Cues
The sell-off was compounded by weak performance in global markets:
- Asian Markets: Key markets like China, Hong Kong, and South Korea fell by up to 1.5%.
- U.S. Markets: Overnight declines in American indices, driven by fears over trade wars, added to the negative sentiment.
Indian markets mirrored these global trends, with FIIs (Foreign Institutional Investors) remaining in a “wait and watch” mode.
4. Reduced FII Activity
While FIIs were net buyers earlier this week, their activity slowed down due to uncertainty over global developments. Analysts attributed their cautious stance to recent MSCI index adjustments, coupled with a stronger dollar, deterring aggressive investment.
Broader Market Performance
Despite the downturn in large-cap stocks, mid-cap and small-cap indices showed resilience:
- BSE MidCap Index: Up by 0.05%.
- BSE SmallCap Index: Gained 0.63%.
Sectors like pharma and FMCG witnessed limited buying activity, indicating selective investment opportunities amid broader market weakness.
Top Decliners and Sectoral Analysis
IT and Auto Sector
- Infosys, Tech Mahindra, and TCS led the losses in IT.
- In the auto sector, Mahindra & Mahindra and other major players saw declines due to concerns over reduced demand and rising input costs.
Other Notable Declines
Banking and metal stocks also saw moderate selling pressure, further dragging the indices.
FAQs on Today’s Market Movement
Q: What triggered today’s sharp decline?
A: Weak global cues, inflation concerns, and FII inactivity were the primary factors. U.S. tariff policies further dampened investor sentiment.
Q: Which sectors were hit the hardest?
A: IT and auto stocks were the major laggards, reflecting a global trend of weak performance in export-reliant sectors.
Q: Were there any positives in the market today?
A: Mid-cap and small-cap indices showed resilience, with some buying in pharma and FMCG sectors.
Q: How are global markets performing?
A: Asian and U.S. markets have shown broad declines, mirroring concerns over trade policies and inflation.
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