Why is the Indian stock market going down?

In anticipation of the RBI policy statement on Thursday, which coincides with the weekly expiry of Nifty options, traders are waiting for the Nifty to close at 305 points on Wednesday. The index formed an indecisive candlestick pattern on the daily chart.

How Does the Stock Market Work?

Interested parties can trade shares and other financial instruments on stock exchanges in a safe and regulated setting. Without giving up ownership of their firm, businesses can sell their shares on the stock market to generate more money. Investors can increase their wealth by purchasing and selling a wide range of shares and corporate bonds and diversifying their financial portfolios.

However, there are some hazards associated with investing in the stock market. The stock market is notorious for its volatility, with investors seeing huge gains one day and severe losses the next. The main worry shared by all investors is the impact of stock market collapses on their money.

1. US recession

The Sahm Recession Indicator flashed over the 0.5 level, suggesting that a recession may be imminent, raising concerns that the US economy may be headed into a recessionary period. This coincides with a sharp slowdown in US employment in July, with the nation adding just 114,000 jobs as opposed to the average of 215,000 jobs each month last year. The US jobless rate has surged to 4.3%, the highest level since October 2021.

2. Asian Markets

The Bank of Japan (BOJ) has increased interest rates to levels not seen in 15 years and introduced a thorough plan to slow down its large-scale bond buying, signalling a step towards ending a decade of significant stimulus. This unexpected rate hike, the biggest since 2007, came shortly after the BOJ ended eight years of negative interest rates. The new BOJ chief is aiming to undo his predecessor's unconventional policies. Following this decision, Japan's Nikkei 225 dropped, and the yen strengthened against the US dollar.

3. Tensions between Iran and Israel

As a result of Iran, Hamas, and Hezbollah vowing to exact revenge on Israel for killing the leaders of Hamas and Hezbollah's military, tensions in the Middle East increased. The Middle East's escalation might raise oil prices, which are now at an eight-month low due to a decline in demand.

4. Tepid Quarter 1 results

For the quarter that concluded in June, earnings growth was only 2% year over year. The thirty Nifty 50 businesses who have released their earnings thus far show a YoY increase of 0.7 per cent but a QoQ fall in net profits of 9.4%.

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