While the domestic primary market remains buoyant, the secondary market has been witnessing severe volatility for some time now. The question troubling investors at present is when the secondary market will finally stabilize. It has to be said that finding an immediate answer to this is also difficult. This is because, apart from the domestic situation, several factors across the world are also affecting the market. In particular, even though more than seven months have passed since the US and Israel began the war against Iran, the objective set by the US has not been achieved. As a result, tensions continue to erupt in one region or another in West Asia. Due to the rising crude oil prices over the past few months, the market has been suffering heavy losses. With oil prices rising, prices of essential commodities as well as all other goods have already increased in the country. Adding to this, the RBI has recently increased the repo rate by 25 basis points, which is set to make home loans as well as vehicle loans more expensive. Although the RBI limited the interest rate hike to 25 basis points, lower than what the market had expected, RBI Governor Sanjay Malhotra made it clear that more stringent measures cannot be ruled out in the coming days.
As a result, there is a possibility that interest rates could rise further in the coming days, and it has become clear that there is little possibility of these rates declining. On the other hand, with US bond market yields remaining high, FIIs as well as FPIs are withdrawing their investments from the domestic market on a large scale. At the same time, AI-related concerns are also haunting the market, particularly the IT sector. Due to El Niño, rainfall has declined sharply this year. Expectations that this could have a negative impact on the agriculture sector and lead to a decline in demand in rural areas are also weighing negatively on the market. Against this backdrop, the domestic stock market witnessed a sharp fall on Thursday. The BSE Sensex fell 1,045 points and closed at 71,593 points. As a result, the value of shares of companies listed on the BSE was wiped out by around Rs 10 lakh crore in a single day.
The market remained in losses from the beginning of trading on Thursday. In the middle of the session, selling pressure increased further, resulting in heavy losses. In particular, factors such as the end of the US-Iran war and stability in fuel prices, policy decisions by the central government that would encourage FIIs to look towards Indian markets, and the second-quarter results of corporate companies will determine the direction and course of the market in the coming days. Another key point here is that if the uncertainty surrounding the US-Iran war continues for a longer period, there are expectations that the rise in fuel prices could have an even more negative impact on the domestic economy. Looking at the current trend, stock market experts estimate that the market could remain under severe pressure for a few more days.