Mumbai: The Big Bull seems to have lost its stamina. After scaling the 50,000 peak last week, the BSE Sensex is on a losing spree and shed 2,917 points in the previous five trading sessions. Similarly, the broad-based NSE Nifty retreated 827 points since 21 January.
While many experts were predicting a correction in the stock market that had a dream run in the last nine months with around 95 per cent appreciation, the current free-fall wiped out nearly 9.5 lakh crore investor wealth.
Hear are the top reasons behind the fall
1. Weak global cues: On the global front, Wall Street posted its biggest one-day percentage drop in three months amid a wave of profit-booking, even as the US Fed left the benchmark interest rate unchanged near zero and vowed to maintain its bond-buying program.
Asian and European bourses too wilted under selling pressure amid an unabated rise in COVID-19 cases.
As the domestic markets are tracking the global markets for a while, the current slide seems to have been triggered by the negative global sentiment.
2. F&O expiry: As the January futures contracts are set to expire on 28 January there was huge volatility in the market. Analysts said investors of late have preferred taking profits off the table ahead of the futures and options (F&O) expiry.
3. Profit booking by FIIs: As per analysts, profit-booking by Foreign institutional Investors (FIIs) is a major reason behind the current fall in the D-street.
"It is well-known that a fall in FIIs inflows will be the biggest risk to the liquidity-driven rally. Indian bourses mirrored mixed sentiment from global peers with a downward rally owing to consecutive days of FII selling,” said Vinod Nair, Head of Research at Geojit Financial Services.
For instance, Foreign institutional investors (FIIs) sold equities worth Rs 765.30 crore on a net basis in the Indian capital market on Monday alone, exchange data showed.
4. Uncertainty ahead of the Budget: As the uncertainty looms large over policies to be announced by the Union Finance Minister Nirmala Sitharaman during the Budget speech on Monday, investors are also preferred to remain in a risk-averse mode.
"A continued pullback in domestic markets is mainly led by profit-booking ahead of the union budget," said Binod Modi, Head-Strategy at Reliance Securities.
(With agency inputs)
