Top 5 Reason Why  Stock Market Crash

On Monday, August 5, Indian stock market benchmarks, the Sensex and the Nifty 50, experienced significant declines of nearly 3% each. This drop was in line with global market trends, as concerns over a potential US recession and escalating tensions in the Middle East unsettled investors

Reason 5

Reason 5

Technical aspect

Nifty 50 drops below its 20-day moving average

Shrikant Chouhan, head of equity research at Kotak Securities, noted that for the first time in a while, the Nifty closed below its 20-day simple moving average, which is generally negative. The Nifty also formed a long bearish candle on daily charts, suggesting more weakness ahead.

Reason 4

Reason 4

Disappointing First  Quarter Results

India Inc.’s financial results for the June quarter (Q1FY25) were mixed and did not lift market spirits. Experts worry that the current high market valuation might not be supported by these earnings. Recent market gains have been driven by earnings growth, but experts observe a slowdown in earnings across several sectors. This slowdown may have led to some investors selling off stocks to lock in profits.

Reason 3

Reason 3

High valuation

The high valuations are mainly driven by continuous liquidity flows, especially in the mid and small-cap segments. Overvalued sectors like defence and railways may face pressure. The strategy of buying on dips, which has been successful during this bull run, may no longer be effectiv

Reason 2

Reason 2

Increasing  Conflicts  in The  Middle East

According to media reports, Iran has promised to retaliate after Israel killed Hamas political leader Ismail Haniyeh. Haniyeh was in Iran to attend the inauguration of the newly elected Iranian President Masoud Pezeshkian when he was killed.

Reason 1

Reason 1

US Recession  fears

Concerns about a potential recession in the US have significantly shaken investor confidence worldwide. The US unemployment rate rose to 4.3 percent in July, a near three-year high, compared to 4.1 percent in June. This marked the fourth consecutive monthly increase in unemployment.

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