Markets Slide in Afternoon Trade: 3 Key Concerns Weighing on Investor Sentiment
Concerns over value and FII scepticism caused the Sensex to drop 600 points. a thorough examination of the factors causing the selloff.
In afternoon trade, the market cut becomes more severe. The Nifty breaks below 24,600 once more, and the Sensex is down more than 600 points in a single day. Coal India, Adani Group stocks, Bajaj Finserv, and L&T are the main trading losers.
However, the BSE Smallcap Index is trading flat, and the small and midcaps are displaying a relative resilience. There is a 0.4% decline in the BSE Midcap Index.
Three reasons why markets are falling today?
Some of the key reasons why the market are under pressure today –
Valuations worries
India market valuations are continuing trending upward despite the big pullback over the last few months. Kotal Institutional Equities recently released a study that emphasised the “expensive valuations across sectors and stocks.” According to Financial Express.com, Sanjeev Prasad of Kotak Institutional Equities noted that the Indian economy is projected to face “domestic growth headwinds across consumption, investment, and outsourcing sectors as well as global growth and inflation challenges.”
FIIs not comfortable buying Indian stocks beyond certain valuation
Yesterday, FIIs were net sellers. The value of the stocks they sold was Rs 2,590 crore. The sentiment of the market is also being affected by this. Deepak Jasani, a market specialist, noted that “the valuation concerns by FIIs are one of the reasons why the Indian markets are seeing some amount of selling.” The main reason FIIs were net sellers in yesterday’s trading was that they don’t feel comfortable purchasing Indian companies over a particular valuation. Additionally, this has been impairing general purchasing sentiment.
Global concerns
Sentiment is also being impacted by certain global issues. For the first time in eight months, factory activity in China decreased in May, suggesting that the manufacturing powerhouse may be suffering as a result of US tariffs. The Caixin/S&P Global Manufacturing PMI significantly underperformed analysts’ forecasts, dropping from 50.4 in April to 48.3 in May. US futures are down, and the majority of Asian markets closed lower. Both the Dow Jones Industrial Average Index Futures and the Nasdaq-100 Futures are down 0.4%.
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