Indian markets tanking after all time highs

Updated: Sep 13, 2019

Bombay Stock Exchange (BSE SENSEX), NIFTY 50, the primary indices that in a nut-shell cover the Indian markets are plummeting since mid-may. Above is the look at today's drop. Indian stocks have been sky-rocketing to never seen levels earlier in the year (2018) in tandem with global stock indices.

Most recently though the political scene has been getting unstable (Karnataka assembly elections, the outcome vs the assembly collation formation, all acting as a pre-curser to the upcoming General elections in 2019 that will decide the fate of PM Modi and his party BJP vs the long run Congress party). Common man is getting impatient with the drastic measures taken by current government like the de-monetization act, GST implementation and losing trust in the Modi government inspite of all the good work and GDP growth seen by the country. This could be one of the likely causes of reversal in Indian market as some sectors that were earlier scene booming by investors could be in doldrums if the government were to change next year.

Another factor that is impacting markets negatively is the increasing Oil price; there by making Oil and Gas, Automobile, and related stocks less lucrative by investors. To add fuel to the mix is the weakening Rupee vs the USD and other major currencies. Rupee ($USD/INR) has seen quite some stable growth in last few years despite global worries, US elections and the impact to Emerging markets like India, due primarily to strong GDP growth and controlled Inflation. This has taken a hit as Oil rises and political worries gather.

Additional factor to watch in immediate days will be the RBI (Reserve Bank Of India) monetary policy decision on rate hikes, scheduled for 6th June 2018. RBI is expected to raise its rate for the first time since 2014, however will it happen now in June or later in the year is something to watch. Inflation is the key factor attributed to the decision while India's GDP growth has been returning the stellar 7% plus growth levels.

May has been historically a SELL month for investors (SELL in May and forget for few months). Looks like 2018 has been no different. BSE SENSEX, NIFTY indices though are hovering at all time highs and for investors who want to get in should for further low prices to enter the stock market. Wait and watch should be the stance right now as many things happening in the market.

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