India’s stock market isn’t recovering any sooner? Here’s why

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Efforts by Reserve Bank of India, Securities and Exchange Board of India and FM Arun Jaitley to soothe the sceptical behaviour of market investors went in vain when market benchmark indices dreaded in comparison with previous day in early trade on Tuesday morning. 

In the early trade today, At 9.30 AM, the BSE Sensex broke 106.99 points or 0.29% at 36,198.03. Although, it has managed to recover 103 points at 10.20 am today. Whereas, the Nifty fell 36.70 points or 0.33% at 10930.70. The volatile market is anticipated to end in red.

As reported by Live Mint, BSE Sensex and NSE Nifty have fallen below their 100-day moving average directing towards a negative trend in the market. Excluding today’s trade, the Sensex has lost over 5% in the last 5 sessions.

MAJOR REASON BEHIND MARKET CRASH

The key factors affecting the market trend includes the cash-strapped firm, Infrastructural Leasing and Financial Services (IL&FS) which is stuck in the vicious circle of debt and financial crisis. 

So far the promises of government to mitigate liquidity risk haven’t taken any form of an action leading to frightened investors.

Shares of Non-banking Financial companies (NBFCs) have also witnessed a sharp decline owing to the debt obligations of IL&FC. The decline was then provoked by a news where liquidity fears against Dewan Housing Finance Ltd (DHFL) buzzed in the market. Even after giving clarification, most of the shares of NBFCs are trading low.

The marketing is betting big on RBI’s monetary policy announcement on October 5 to contain rupee depreciation, widening current account deficit, and rising inflation. US’s Federal Open Market Committee prior to RBI’s monetary policy announcement might change the game of the market forces.

US Sanction against Iran effective from November 1 and Indian currency’s freefall accompanied by inadequate action by the government have resulted in higher crude oil price. Petrol has touched almost ₹ 91 in many places in Maharashtra.

With five state elections in line followed by a general election in 2019, it is going to be a tough task to balance market amid global trade war crisis.

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