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Sensex Nifty Stock Market Crash: 856.65 Point Plunge Explained
The Indian stock market experienced a significant downturn on February 24, 2025, with the BSE Sensex plummeting 856.65 points (1.14%) to close below 75,000 at 74,454.41, and the NSE Nifty falling 242.55 points (1.06%) to settle below 22,600 at 22,553.35. This marked an eight-month low for both indices, extending a five-month losing streak—the longest since 1996.
Why the Market Fall?
Several factors contributed to this sharp decline. Global headwinds played a significant role, mirroring a slump in the US market fueled by concerns over softening consumer demand and potential new tariffs. A 15-month low in US consumer sentiment and rising inflation expectations further fueled anxieties about stagflation in the world's largest economy. This negatively impacts India's export-oriented sectors, particularly IT.
Foreign Institutional Investor (FII) selling continues to be a major pressure point. FIIs have been consistently withdrawing investments from Indian equities, with February alone witnessing net sales exceeding â‚ą36,977 crore. While Domestic Institutional Investors (DIIs) are buying, their purchases haven't offset the significant FII outflows. The "Sell India, Buy China" trend, driven by China's economic recovery initiatives and relatively cheaper stock prices, also contributed to the negative sentiment.
While Q3 earnings showed some improvement, they haven't been strong enough to reverse the downward trend. Persistent concerns over the US's reciprocal tariff threats and geopolitical uncertainties further added to investor apprehension.
Technical Analysis and Expert Opinions
Technical analysts point to bearish patterns, such as the Nifty breaking down from a bearish flag and pole pattern, indicating a potential continuation of the correction. Support levels are being closely monitored, with potential further declines predicted in the short term. Experts like Rupak De of LKP Securities and Nagaraj Shetti of HDFC Securities expressed bearish sentiments in the near term.
However, some experts suggest that the pace of earnings downgrades might ease, supported by government spending, lower interest rates, and tax reductions, potentially boosting sectors like FMCG, consumer discretionary, and banking.
Conclusion
The Sensex and Nifty's sharp decline reflects a confluence of global and domestic factors. While the long-term growth prospects of the Indian economy remain positive, short-term volatility is likely to persist. Investors are advised to carefully monitor global market developments, FII flows, and economic indicators for potential recovery signs.
Disclaimer: This article provides information and analysis based on publicly available data. It is not financial advice. Consult a qualified financial advisor before making any investment decisions.
