{"id":43173,"date":"2024-10-27T09:28:49","date_gmt":"2024-10-27T03:58:49","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=43173"},"modified":"2025-05-06T00:18:45","modified_gmt":"2025-05-05T18:48:45","slug":"indian-stock-market-slide","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/indian-stock-market-slide\/","title":{"rendered":"Indian Stock Market Slide"},"content":{"rendered":"<h2><strong>What\u2019s in today\u2019s article?<\/strong><\/h2>\n<ul>\n<li>Why in News?<\/li>\n<li>Introduction to the Indian Stock Market<\/li>\n<li>Market Overview<\/li>\n<li>Reasons Behind the Decline<\/li>\n<li>Global Comparison<\/li>\n<li>Sectoral Impact on Small and Mid-Cap Stocks<\/li>\n<li>Outlook and Future Expectations<\/li>\n<\/ul>\n<h2><strong>Why in News?<\/strong><\/h2>\n<ul>\n<li>The Indian stock market has seen a consistent decline over the past month, with key indices like the Sensex and Nifty falling nearly 1% on Friday, marking the fifth consecutive day of losses.<\/li>\n<li>This drop represents a 7.5% decline for the Sensex in the last month &#8211; the largest among global markets during this period.<\/li>\n<\/ul>\n<h2><strong>Introduction to the Indian Stock Market:<\/strong><\/h2>\n<ul>\n<li><strong>Understanding shares:<\/strong>\n<ul>\n<li>Shares represent a unit of ownership in a company, not a physical asset.<\/li>\n<li>Companies issue shares to raise funds for various needs.<\/li>\n<li>Buying or selling shares requires going through a broker or stock exchange, and share prices fluctuate based on demand and supply dynamics.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Types of investments: <\/strong>Investors in the stock market can choose between:\n<ul>\n<li><strong>Long-term (Equity investments):<\/strong> Designed for extended growth, these are popular for their potential to yield high returns over time.<\/li>\n<li><strong>Short-term (Debt investments):<\/strong> Typically, lower-risk, these are intended for quicker returns.<\/li>\n<\/ul>\n<\/li>\n<li><strong>How does the share market work in India?<\/strong>\n<ul>\n<li>The Indian market is divided into two primary stock exchanges:\n<ul>\n<li>National Stock Exchange (NSE): A leading stock exchange in India.<\/li>\n<li>Bombay Stock Exchange (BSE): One of the oldest and most established exchanges in India.<\/li>\n<\/ul>\n<\/li>\n<li><strong>The Securities and Exchange Board of India (SEBI)<\/strong> regulates these exchanges to ensure fair practices and investor protection.<\/li>\n<li>Here, securities like equities, bonds, ETFs, and derivatives trade at prices driven by demand and supply.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Purpose of the stock market:<\/strong>\n<ul>\n<li>The stock market serves as a regulated, centralised platform where companies and investors meet.<\/li>\n<li>Its primary goal is to facilitate business expansion by allowing companies to raise capital through the sale of shares, providing investors opportunities for profit and growth.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><strong>Market Overview:<\/strong><\/h2>\n<ul>\n<li><strong>Sensex performance:<\/strong> The BSE\u2019s 30-share Sensex dropped by 662.87 points (0.83%) on Friday to close at 79,402.29.<\/li>\n<li><strong>Nifty performance:<\/strong> The Nifty 50 declined by 218.6 points (0.9%), ending at 24,180.8.<\/li>\n<li><strong>One-month trend:<\/strong> From September 26 to October 25, Sensex fell by 7.5%, while other global indices experienced smaller declines or even gains.<\/li>\n<\/ul>\n<h2><strong>Reasons Behind the Decline:<\/strong><\/h2>\n<ul>\n<li><strong>Foreign Portfolio Investors (FPIs) sell-off:<\/strong> FPIs have withdrawn record funds totalling Rs 85,790 crore in October.<\/li>\n<li><strong>Geopolitical tensions in West Asia:<\/strong> Uncertainties due to the West Asian conflict have weakened investor sentiment.<\/li>\n<li><strong>Corporate Q2 results:<\/strong> Lower-than-expected corporate earnings have impacted confidence. Net profit growth of 502 companies slowed to 4.1% in Q2.<\/li>\n<li><strong>Shift to primary markets:<\/strong> Money has flowed from the secondary market to initial public offerings (IPOs), creating a liquidity shortage.<\/li>\n<\/ul>\n<h2><strong>Global Comparison:<\/strong><\/h2>\n<ul>\n<li>India has been the hardest hit among major indices, experiencing a 7.5% fall.<\/li>\n<li>Meanwhile, other indices like Shanghai (9.99%) and Hang Seng (3.85%) have surged.<\/li>\n<\/ul>\n<h2><strong>Sectoral Impact on Small and Mid-Cap Stocks:<\/strong><\/h2>\n<ul>\n<li><strong>High valuations and liquidity shortage:<\/strong> Small- and mid-cap stocks have dropped over 8% due to high valuations and limited liquidity, as retail investors divert funds to IPOs.<\/li>\n<li><strong>Individual stock performance:<\/strong> Many small-cap stocks have fallen 20-30%, primarily due to valuation concerns.<\/li>\n<\/ul>\n<h2><strong>Outlook and Future Expectations:<\/strong><\/h2>\n<ul>\n<li>Market analysts are cautiously optimistic about a recovery within the next two months.<\/li>\n<li>Despite the short-term pressures,<strong> the medium to long-term growth prospects of the Indian economy remains strong.<\/strong><\/li>\n<li>Valuations suggest a moderate overvaluation but not at a level that would significantly deter long-term investment.<\/li>\n<\/ul>\n<hr \/>\n<h3><strong>Q.1. Who are the Foreign Portfolio Investors (FPIs)?<\/strong><\/h3>\n<p>FPIs are individuals, corporations, and institutional investors from other countries who invest in a country&#8217;s financial markets. They do this to take advantage of opportunities in the country&#8217;s economy, without directly controlling or managing the companies they invest in.<\/p>\n<h3><strong>Q.2. What are ETFs?<\/strong><\/h3>\n<p>An exchange-traded fund (ETF) is a collection of securities, like stocks or bonds, that trades on a stock exchange like individual stocks. ETFs offer investors a way to buy a variety of assets in a single transaction, and can be a low-cost way to gain exposure to the stock market.<\/p>\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/business\/market\/sensex-nifty-stock-market-crash-today-9638154\/\" target=\"_blank\" rel=\"nofollow noopener\"><u>Sensex plunges 7.5% in a month to below 80,000; record FII outflows in October<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Indian stock market has seen a consistent decline over the past month. This drop represents a 7.5% decline for the Sensex in the last month &#8211; the largest among global markets during this period.<\/p>\n","protected":false},"author":5,"featured_media":43174,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-43173","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/43173","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=43173"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/43173\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/43174"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=43173"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=43173"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=43173"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}