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Stock market that suffered massive losses; What are the reasons..?

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Indian stock market indices lost nearly half a percent on Wednesday on high profit booking. The Sensex closed down 426.87 points, or 0.53 points, at 79,924.77, while the Nifty lost 108.75 points, or 0.45 per cent, at 24,324.45.

From maximum to minimum

The Sensex touched a high of 80,481.36 and the Nifty 50 touched a high of 24,461.05 during the session. However, the Sensex fell 1,045 points to hit an intraday low of 79,435.76 as selling intensified in the wake of profit taking. The Nifty 50 also hit a lifetime high at 24,461.05 in early trade. But from there it fell 319 points to hit an intraday low of 24,141.80. The Bank Nifty index also closed down 379.50 points or 0.72% at 52,189.30. The index touched a high of 52,528.80 points and a low of 52,075.40 points intraday.

In sectoral indices..

Among the sectoral indices in the stock market, Nifty Auto, Nifty PSU Bank, Nifty IT and Nifty Metals lost the most. Sales were also made in broad markets. Nifty Small Cap 100 lost 0.88 percent and Nifty Mid Cap 100 lost 0.27 percent. Ahead of the upcoming Q1 results season, high levels of profit booking, concerns over widening valuations and mixed global market signals have weighed on investor sentiment.

These are the main reasons for the stock market crash today.

Mixed international codes

Asian markets were mixed despite Wall Street’s gains on comments from US Federal Reserve Chairman Jerome Powell. Market circles focused on inflation data from Japan and China. China’s consumer price inflation rose 0.2% in June from a year ago, while producer prices fell 0.8% from a year ago. Japan’s wholesale inflation rose 2.9 percent in June.

Profit booking

As the two benchmarks Sensex and Nifty ran strongly, investors turned to profit booking in the stock market. Sensex touched a record high of 80,481.36 and Nifty 50 also touched a record high of 24,461.05 in morning trading on July 10. Increased valuations in the market prompted investors to book profits in overvalued stocks.

Rate cut uncertainty

Growing uncertainty over the US Federal Reserve’s rate cut this year has had an impact on the stock market. In his testimony before Congress, the chairman of the US Fed, Jerome Powell, spoke about how soon the rate cut would come. Powell said a rate cut would not be appropriate until the Fed had confidence that inflation would reach its 2 percent target.

Domestic inflation concerns

Worries about rising domestic inflation, Consumer Price Index (CPI)-based inflation or retail inflation in June also weighed on investor sentiment. Analysts expect CPI inflation to rise to 5 percent in June from 4.75 percent in May due to rising prices of food products, mainly vegetables. Core CPI inflation is expected to moderate at 3.2 percent in June.

Q1 results

Q1 results of this financial year are expected to be disappointing. Nifty 50 net profit expected to decline sequentially. According to Kotak Institutional Equities, the BSE-30 index’s Q1 net profits may rise 8.1% year-on-year, but decline 8.4% quarter-on-quarter.

Note: The above views and recommendations are those of individual analysts or broking companies and not of GoldAndhra . We advise investors to consult certified professionals before making any investment decisions.

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