New Delhi: Indian stock markets have been very volatile over the past two weeks. On Tuesday, the benchmark, Sensex, showed strong swings. It opened at 57,621 and moved to 57,925. Later, Sensex fell to 57,058, later repeating the cycle of highs and lows throughout the day. As of 3 p.m., the index was trading at 57,523, about 100 points lower than the opening high.Read also – Share Market Today: 20 stocks for a profitable trade on February 8
Nifty50 has also been very volatile. After peaking at 17,536 on Tuesday, it fell to 17,119. As of 3 p.m., the index was trading at 17,220, about 300 points below the opening level. Real estate and banking stocks were weak performers. Read also – Adani Wilmar IPO today. Direct link to check the stock price here
But what explains the volatility of India’s stock markets. Let’s take a look. Read also – Monday Blues: Sensex closes more than 1,000 points lower, Nifty just over 17,200
Sale by foreign investors
Foreign investors are an important part of Indian markets. On Monday, the United States published its employment report. The report was quite positive. After the report, according to Economic Times, there is a good chance that the Federal Reserve, the central bank of the United States, will raise interest rates to control inflation.
This rise in rates will cause bond yields to rise and investors prefer bonds to markets from a safety perspective. This played a major role in Indian stock markets acting more volatile than usual.
Monetary Policy Committee meeting
The Reserve Bank of India (RBI) is holding its monetary policy meeting between February 8 and 10. The outcome of the meeting will be announced on Thursday 10 February. Investors fear that the RBI will raise policy rates, which will send money out of the stock markets into the banks.
Rate hikes are likely to control the rate of inflation. In addition, central banks around the world plan to adopt tighter monetary policy to limit the soaring budget deficit due to pandemic support programs.
This too has played a major role in weakening the minds of investors.
Rise in oil prices
In just a few weeks, crude oil prices have gone from $65 a barrel to $93 a barrel. According to the media, this is due to rising geopolitical tensions across the world.
Russia, which is the world’s second largest oil supplier, is very close to an armed conflict with its neighbor Ukraine. On the other hand, in the Middle East, Houthi rebels in Yemen and the United Arab Emirates are constantly exchanging fire.
With supply sources so stressed, oil prices are rising. This put additional pressure on central banks to adopt a hawkish stance, leading to volatility in the markets.
If reports are to be believed, market volatility will continue for a few more days.
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