Sensex Downfall Makes Minimal Waves in Indian Economy
There has been a downfall of the Sensex in the Indian stock market since after Diwali. The Muhurat trading after the Diwali in this year starts from a sudden drop in the market. There will be two days for Diwali in the Indian stock market, which makes the Muhurat trading special in Dalal Street, but this made a panic situation among the stuck brokers and buyers. The Sensex of Nov. 1, 2024, closed approximately 65,259, which shocked the traders, not the economist, as the drop in Sensex is predicted but not at an anticipated rate. Comparing to the previous week, Oct. 25, 2024, the Senex closed by 79,402.29 and the India Sensex reached its all-time high by 85,978.25 on September of 2024 only, which shows this downfall is serious because there is fluctuation after that highest point, but this downfall is recorded in not having much time period difference higher to lower.
The Sensex (Stock Exchange Sensitive Index) and Nifty (National Stock Exchange Fifty) are the indices calculated by BSE (Bombay Stock Exchange) for having simple understanding in the share market. Like all stock markets around the globe, India also works the same, which makes it have the same problems, and problems from outside the nation also have higher impacts. The FII (Foreign Institutional Investment) is where Indian companies pull their investment from foreign institutions. There will be fluctuations in that due to the geographic politics issue impacting the currency oil and gold price. DII (Domestic Institutional Investment), known as the local market where the trader from India invests their money in companies, has its impact from national issues. Both DII and FII are used to determine the Sensex and Nifty and are controlled by SEBI (Securities and Exchange Board of India), which also contributes to the nation’s economic strength. The overselling or overbuying of stocks has negative impacts on countries’ economies.
There is overbuying of stocks by FII from last year, which overvalued the Indian stock market, which is in its highest Sensex since this year’s march. There is a serious overbuying of stocks without much selling, and there has been no new IPO (initial public offering) in the stock market for long, making this drop predictable. After the market’s two days of leave, the FII starts selling its stocks due to the overvaluing of stocks they created. Currently, there has been a recession period over the globe where few countries are having a bad time with their economies. The Indian government stated that the inflation rate is under control since the purchasing power and increase price of goods by the various factors. One of the major conflicts mentioned is the current wars around the globe; it increased the price of commodities like gold and oil in India, which has its own impacts in this downfall too. After the sudden drop in the market also made a drop in the price of gold. The DII is also facing problems due to nation politics, current elections, and weakening of currency, which all resulted in this current drop in market. The US election 2024 had over as Donald Trump became the new American president. Trump strategised a few economic plans in his election propaganda; it also worked in the results. It was also going to impact the market by the new policy from that nation. After the election result, there is a sudden rise in the share market. There have been many predictions in the market since the election.
Even though the downfall is predicted beforehand, it doesn’t have much impact on the country’s economy, where it helps to have balance in the market. The country’s economy crumbles when the share market reaches bear market, and the possibility of India reaching bear market is very low. There is a prediction that sensex may also get even lower because the stocks were overvalued from last year; it will be balanced by this downfall. The current war and change of power will impact the nation’s market and economy in the coming days.
