The stock market has experienced significant fluctuations recently due to various factors. Here are some key reasons contributing to the market crash:
- *Geopolitical Tensions*: Rising tensions between the US and Iran, as well as Israel's airstrikes on Iranian nuclear facilities, have unnerved global markets and pushed oil prices higher. This has increased concerns about inflation and interest rate expectations.
- *Global Economic Uncertainty*: The World Bank has warned that US tariff policies will cause a slowdown in both the US and global economies. Concerns over economic growth, trade wars, and potential recessions are weighing heavily on investor sentiment.
- *Weak Earnings and Market Valuations*: Weak earnings by Indian banks and stretched valuations in the Indian stock market have prompted profit booking by domestic and foreign investors. The Nifty 50's current P/E ratio is above its one-year average, adding to investor caution.
- *Aviation Tragedy and Sentiment Shock*: The recent Air India Boeing 787 crash in Ahmedabad has sent shockwaves across the aviation sector, rattling investor confidence and putting pressure on related stocks.
- *Technical Breakdown and Bearish Market Structure*: Both Sensex and Nifty have formed long bearish candles, breaching crucial support levels. Analysts warn of continued volatility and potential further declines if key support levels are breached.
Some of the affected sectors include ¹ ²:
- *IT and Telecom*: Stocks in this sector have been impacted due to global risk aversion and concerns over economic growth.
- *Auto and Metal*: These sectors have been affected by weak global cues and rising geopolitical tensions.
- *FMCG and Pharma*: These defensive sectors may be less exposed to oil price shocks and global demand fluctuations, making them potentially more stable.
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