Why the Indian Stock Market Crash today?
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The Indian stock market experienced a significant downturn on January 13, 2025, primarily due to domestic and international factors.
US Jobs Data and Bond Yields: Strong US jobs data signaled fewer Federal Reserve rate cuts, leading to a rise in US bond yields. This scenario often results in capital outflows from emerging markets like India, putting downward pressure on stock prices.
Foreign Institutional Investors (FIIs) Selling: FIIs have continued selling, likely due to the high US bond yields and a stronger dollar, which impacts investment decisions in foreign markets like India.
Oil Prices: Crude oil prices reached a three-month high, which could signal inflationary pressures or increased costs for oil-dependent economies, contributing to market nervousness.
Rupee Depreciation: The Indian Rupee hit a lifetime low against the US dollar, which is often a sign of economic or market instability and can lead to a loss of investor confidence.
Global Economic Conditions: Stock markets can be influenced by global economic trends. For example, concerns about global recessions, interest rate hikes by central banks (like the US Federal Reserve), or economic slowdowns in major economies can lead to declines in markets worldwide.
Inflation Concerns or Interest Rate Hikes: If investors perceive that inflation is rising, or central banks are raising interest rates to combat it, it can cause market sell-offs as the cost of borrowing rises, affecting businesses and consumer spending.
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