Why is the Indian stock market plunging today?

EXPLAINED

It’s Friday, and the stock market decided to throw a tantrum. While some are clutching their portfolios in despair, others are already drafting their “I told you so” tweets.

Either way, we’re here to break it all down —minus the panic tho.

---

📌 The stock market is facing intense selling pressure - here’s why

If you checked the Indian stock market this morning, you probably winced a little. Or a lot.

The Nifty 50 opened on a weak note at 22,433 and quickly dropped to an intraday low of 22,220, shedding over 1.2%.

Sensex? It tumbled more than 1,000 points in no time, dipping to 73,542.

Bank Nifty followed suit, slipping 0.6% to 48,161.

But the real bloodbath wasn’t just in the big names.

The broader market took an even bigger hit: small-cap and mid-cap indices nosedived over 2%, dragging stocks like Patanjali Foods, Granules India, and Deepak Fertilisers down with them.

Meanwhile, a few outliers like KEI Industries and Coal India managed to swim against the tide.

By 11:30 AM, the damage was clear:

🔴 360 stocks locked in lower circuits
🔴 728 stocks hit a 52-week low
🟢 78 stocks defied the market and hit upper circuits
🟢 43 stocks touched 52-week highs

So, what’s causing this massive market sell-off?

Market experts point to five key reasons for the sell-off:

1️⃣ Banks make up 30% of Nifty 50’s weight, so any bad news from them hits hard. Rumors of disappointing Q4 results sent shockwaves through the market.

2️⃣ While Foreign Institutional Investors (FIIs) have been selling, DIIs haven’t stepped in to balance the scales. They’re holding onto stocks at high prices, waiting for clarity.

What are FIIs?

Foreign Institutional Investors (FIIs) are entities like hedge funds, mutual funds, and pension funds that invest in a country's financial markets from abroad. 

Their large-scale buying or selling can significantly impact stock market movements and liquidity.

What are DIIs?

DIIs (Domestic Institutional Investors) are large financial institutions like mutual funds, insurance companies, and pension funds that invest in Indian stocks and securities using domestic capital. 

They play a crucial role in stabilizing the market by countering Foreign Institutional Investors (FIIs) during heavy buying or selling phases.

3️⃣ The upcoming MSCI reshuffling could impact trade volume and liquidity. Investors are bracing for possible portfolio adjustments.

What's the MSCI reshuffling?

The upcoming MSCI reshuffling, effective February 28, 2025, involves adding Hyundai Motor India to the MSCI Global Standard Index and removing Adani Green Energy

4️⃣ FIIs are shifting money to the US, where higher bond yields offer better returns. This trend intensified after Donald Trump’s inauguration as the 47th US president.

5️⃣ China is attracting global capital with economic stimulus measures and attractive stock valuations. FIIs are increasingly adopting a “Sell India, Buy China” approach.

What’s Next? Key Levels to Watch

📉 Nifty 50 – Support at 22,200; if it breaks, expect a slide to 21,750-21,800.
📉 Sensex – Holding at 73,000 for now, but if breached, the next stop is 72,000.
📉 Bank Nifty – The key level to watch is 47,800.

So, is this a short-term panic or the beginning of a deeper correction?

That depends on how earnings reports and global market trends unfold.

For now, investors might want to buckle up, it's going to be a bumpy ride.

---

So, that’s it for today. If you enjoyed this edition, subscribe to hear from us every day!

See ya 👋

- powered by -