Nifty Below 23,800: Why Is The Stock Market Falling Today?

Indian equity benchmarks came under heavy selling pressure on June 23, with the Sensex falling more than 700 points and the Nifty slipping below the 23,900 mark during intraday trade. The decline wiped out nearly ₹4.57 lakh crore from the market capitalisation of BSE-listed companies, which stood at around ₹475 lakh crore.

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Technology stocks led the decline, while weakness across Asian markets and concerns over the U.S. Federal Reserve’s policy path added to risk aversion.

Sharp Correction In South Korean Markets

One of the key triggers behind the selloff was a steep decline in South Korea’s benchmark Kospi index. After scaling record highs earlier this month, the index plunged as much as 10% on Tuesday, prompting the Korea Exchange to suspend trading for 20 minutes after market-wide circuit breakers were activated.

Semiconductor stocks bore the brunt of the decline, with SK Hynix dropping more than 12% and Samsung Electronics losing nearly 13%. The correction came after a strong rally that had pushed the index above the 9,000 mark.

Fed Rate Concerns Return

Higher energy prices during the recent Middle East tensions have revived inflation worries globally. According to CME FedWatch data, markets are assigning an 88% probability of a U.S. Federal Reserve rate increase in December, compared with 61% before last week’s policy meeting.

Elevated U.S. bond yields have raised concerns over capital flows into emerging markets and added pressure on risk assets.

IT Stocks Resume Downtrend

Shares of major IT companies witnessed renewed selling. Infosys, Tata Consultancy Services, Wipro and HCLTech declined more than 3% each after concerns resurfaced over slower technology spending and the impact of artificial intelligence on outsourcing demand.

Investor sentiment was also affected after Accenture lowered the upper end of its annual revenue growth guidance, raising questions about the pace of recovery in discretionary spending by global clients.

Rupee Weakness Adds To Caution

The rupee weakened 0.16% against the U.S. dollar to 94.8275, reflecting broader weakness across Asian currencies. Rising expectations of additional U.S. rate hikes and continued demand for dollars kept pressure on the domestic currency.

Profit Booking After Recent Gains

The Nifty had closed higher in six of the previous eight sessions, supported by easing geopolitical tensions and softer crude oil prices. Tuesday’s decline also reflected profit booking after the recent rally.

Despite lower oil prices following progress in U.S.-Iran negotiations, the restoration of normal shipping activity through the Strait of Hormuz remains a gradual process. Rebuilding global oil inventories may also take time.

With the global signals still ambiguous and uncertainty persisting in the technology stocks, investors will need to watch out for additional signs from the U.S. monetary policy, oil prices, and corporate earnings.