Stock market today: Why are Sensex and Nifty falling?
Both benchmark indices fell on Wednesday due to a mix of factors. Here is all you need to know.
In Short
- Sensex and Nifty extend losses during trading
- China's deflation impacts global markets
- US inflation data awaited; RBI policy review looms
Benchmark stock market indices opened weaker on Wednesday, continuing their weak run from the previous trading session.
Both the S&P BSE Sensex and NSE Nifty 50 extended losses during the afternoon trading session, with the 30-share index down over 325 points to 65,521, while the 50-share index fell nearly 88 points to below 19,500.
The broader market indices also fell in early trade as volatility spiked, reflecting the gloomy sentiment on Dalal Street.
So, why are the benchmark indices falling today? The primary reason behind today’s decline is the weakness in global markets, triggered by weak macroeconomic data emerging from China, upcoming US inflation data, and the RBI's monetary policy decision.
China deflation
Chinese inflation data showed that the consumer price index fell in July, marking its first year-on-year decline since February 2021. The fact that China has slipped into deflation suggests that its economy is under pressure and struggling to recover from the pandemic as demand slows.
The demand slowdown in the world’s second-largest economy could have a major impact on global markets, including India.
US inflation data
Domestic market investors are also trading with caution ahead of the US inflation data, which is expected to offer cues on the recovery of the world’s largest economy.
Headline inflation is likely to pick up slightly in July to 3.3 percent annually, while the core inflation may remain unchanged at 4.8 percent.
A lower rise in inflation is likely to provide confidence to investors as it would not attract future rate hikes.
RBI policy review
Market investors are also awaiting the Reserve Bank of India (RBI) monetary policy decision on August 10. Most analysts expect the RBI to keep the repo rate unchanged, which could provide relief to the markets.
However, analysts also said that the RBI will retain its hawkish stance and keep the door open for future rate hikes – something that could lead to some near-term correction.
