Sensex Continues To Trade In The Red: 4 Probable Reasons

Indian indices have been seeing sharp correction and in today's session hit a low of 59,104 on the Sensex and 17613 on the Nifty. The correction is being seen for a second day in a row amid weak global cues when investors have been awaiting key policy guidance from some of the major global central banks.

Sensex Continues To Trade In The Red: 4 Probable Reasons

Here are few of the probable reasons for the sharp sell-off in the Indian markets.

The markets in the previous day's were the biggest loser in trade on Thursday and are again weak in trade with the biggest knock on the broader markets.

1. Liquidity is making its way to the IPO:

Undoubtedly, the flurry of IPOs on expected listed gains are being lapped by up investor class and hence there is seen some sell-off for this probable reason. As per reports over 100 companies' have filed IPO papers with SEBI and many are to see their debut before the end of this FY22.

2. Sell off by FIIs as US bond yields gain:

Amid gains in the bond yield, there is seen a continuing exodus from the Indian markets. Also, there are valuation concerns surfacing with respect to Indian markets and amid it foreign brokerages have downgraded it.

3. Weak global sentiment:

For the September quarter, US GDP slumped to 2 percent, Japanese September factory output also weakened to 5.4 percent on a month on month basis. Also, there has been reported a spike in some of the developed nations such as the UK and China are fuelling sluggish sentiment.

4. Bank and financials drag:

Even as the financials and banking sector now post a strong outlook given the improvement in NPA situation and take over of bad loans by the NARC, there is seen profit booking in the pack, led by losses in names such as HDFC, Kotak Bank, HDFC Bank, Axis Bank, IndusInd Bank and RBL which is down by a staggering 7 percent. Note public sector banks are once again in the green barring IOB and Central Bank.

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