Sensex and Nifty fall over 0.8% on Tuesday, markets lose Rs 14 lakh crore in four days
Indian markets fell again on Tuesday, with rising bond yields, crude oil prices and interest rate fears weighing on investors.
Indian stock markets fell again on Tuesday. Both the Nifty 50 and the BSE Sensex dropped more than 0.8 per cent, following Monday's sharp fall. The market has lost Rs 14 lakh crore in just four days.
The fall is not confined to a single day. The market has been taking heavy hits for the past few weeks. Several reasons, not just one or two, are believed to be behind it. Rising crude oil prices, higher bond yields and a number of other concerns have shaken investor confidence over the past two days and made them cautious.
The figures for the four days show the Nifty 50 and the Sensex kept sliding between September 23 and September 28. On September 23, the BSE Sensex closed at 74,828. On September 24, the market opened lower and fell 1,247 points to 73,580. On September 25, the Sensex closed 315 points higher at 73,895. At the close on Monday, September 28, at the end of the week, it had fallen 1,124 points.
The reasons for the fall are being put forward in three groups. The first and biggest is the rise in bond yields across the world. It is not only US bond yields that are climbing fast; yields are rising globally too. The US 10-year bond yield has crossed 5 per cent, its highest level since 2007. Investors have therefore pulled money out of equities and other assets and moved it into bonds for better returns.
The second reason is the continued rise in crude oil prices. Prices have risen steadily since the US-Iran war, raising fears of inflation. About 85 per cent of the country's crude oil requirement is imported, which is likely to put pressure on the Government of India.
The third reason is that an era of higher interest rates is fast approaching. After the US Federal Reserve raised interest rates by 25 basis points, the Reserve Bank of India (RBI) is also under pressure to raise rates in India. The market now expects a further 25 basis point increase from the US Fed. This suggests the global economy is heading towards an era of high interest rates. In such conditions the market turns into a "sell-on-rise" market, one that sells on every rally.
