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Why is stock market crashing?

3/15/20241 min read

In the past week, we have seen that the Indian stock market has witnessed a major fall in the stock prices. Here are some of the important reasons to consider:

SEBI chairman Madhabi Puri warned recently that the MidCap and SmallCap stocks are overvalued and are in a bubble, after which ICICI Pru AMC suspended its lumpsum investments in the MidCap and SmallCap funds. Later, the exchange saw almost 5% fall in 'Nifty MidCap 100 Index' and 'Nifty SmallCap 100 Index'.
The inflation rate in the United states has increased in February 2024, therefore investors seem to be afraid about the fact that India might see a hike in the interest rates soon.
Since we are closer to the end of FY 2023-24, many investors sell their loss making stocks to set off their yearly profits against these losses in the same FY in order to save tax. This results in higher supply of stocks in the stock market, which eventually results in bringing the stock prices down.