Why is the stock market crashing and how far will it crash? Read the answers to all your questions here

The Indian stock market continued to fall for the fifth consecutive day today. Both benchmark indices, Sensex and Nifty, have fallen by about 10 percent from their respective record highs in September. In the last five sessions alone, the indices have fallen by about 4 percent. Due to the heavy fall in the market for more than a month, investors have lost about 47 lakh crores. The portfolios of most retail investors have reached the red. Many stocks included in the portfolio have fallen by 50% to 60%. In such a situation, they are not able to understand why this decline in the market continues and how far the market can fall further. If you also invest money in the stock market, then you must be looking for answers to these two questions. Let us answer your questions. 

1. Strong jump in inflation

Once again, inflation has broken the record of 14 months. Let us tell you that due to the cost of food items, retail inflation increased to 6.21% in October. It was 5.49 percent in the previous month i.e. September. The rise in inflation has worsened the market sentiment further. This has led to a big sell-off today. 

2. Heavy selling by foreign investors

Foreign institutional investors (FIIs) are fiercely selling in the Indian market. So far in November, FIIs have sold shares worth Rs 23,547 crore, while in October they sold shares worth Rs 94,017 crore. Due to this, the market is continuously falling. 

3. Rupee at record low 

The Indian rupee reached an all-time low as the dollar strengthened. Donald Trump’s victory in the US election has boosted the dollar index, which has risen 1.8% so far this month. This has also affected the market. 

4. Poor results of companies 

The quarterly results of Indian companies have not been good. This has also affected the shares of those companies, which has led to a decline in the market. 

How far can the market fall now? 

Shrikant Chauhan, Head of Equity Research, Kotak Securities said that profit booking continues in the market. There is profit booking in all major sectoral indices. The bearish candle on the daily chart indicates further weakness from the current levels. We believe that the current market structure is weak but oversold; hence we can expect an intraday pullback rally from the current levels. If the market breaks further, then the level of 23400 to 23200 can also be seen once again.