The BSE benchmark sensex slipped nearly 900 points in indraday trade while Nifty fell nearly 270 points.
Fitch’s downgrade of US credit rating from AAA+ to AA+, weak economic data from eurozone and China were main reasons behind the sharp decline in India stock markets.
“There has clearly been some exhaustion in the market,” said Avinash Gorakshakar, head of research at Mumbai-based Profitmart Securities, told Reuters. “At this level, the index has become a little top-heavy. Overall, the Nifty 50 will struggle as the risk-reward is favourable in only selective pockets.”
Nearly two weeks ago, Indian stock indices surged to new highs, with the benchmark sensex surpassing the 67,000-mark for the first time.
Several factors contributed to this bullish trend, including a consistent inflow of foreign portfolio funds (net buyers in Indian stock markets for five consecutive months), a positive economic outlook, strong global markets, and a relative moderation in inflation.
However, in recent sessions, both indices have experienced a gradual decline, partially due to investors engaging in profit booking. Analysts have flagged concerns over high stock valuations, which led to this steady decrease in stock prices.
(With inputs from agencies)