The Indian Stock Market is witnessing a sharp decline again on Friday, 28th February 2025. The BSE Sensex has been down by 1000 points. Nifty 50 has also gone down by 300 points. Many investors have panicked about this situation. As the BSE Small-Cap index crashed more than 2%, BSE Mid-cap also lost nearly 2% during the morning session.
Key Factors behind Stock Market Crash
The downturn is actually driven by several key factors. Which is affecting investor sentiments. Here are the main key reasons:
1. Weak Earning Expectations for Bank: Disappointing earnings from Indian Banks have created selling pressure in the market. Banking stocks constitute a significant portion of the Nifty 50, Thus it’s a crucial factor in performance.
2. MSCI Index: Upcoming changes in the MSCI index are also causing uncertainty. This can impact trading volumes and capital flows to specific stocks. Domestic and Foreign both type of investors are rebalancing their portfolios before changes happen.
3. Rising US Bond Yields: Foreign Institutional Investors are shifting their funds to the US Bond Market, as it offers better returns. This trend is expected to continue until global economic conditions improve and stabilize.
4. DIIs Holding Back: Domestic Institutional Investors are currently hesitant about investing further as they have already taken positions in higher levels. Because of this Selling pressure is still higher than aggressive buying and the market continues to stay jumbled.
5. FIIs Shifting to China: Foreign Institutional Investors are shifting their funds towards China. It has emerged as a more attractive destination due to its economic stimulus and stabilizing economy.
The current market downtrend has broad-based on all sectors looking red. Technology and the automotive industry have been particularly affected by significant drops. As the market goes through tough times investors are advised to remain cautious. The Nifty 50 index is almost near its crucial support level, if this breaks it might decline further.
