The Sensex has fallen and fallen sharply in the last few days. On Monday, the Nifty fell for the 6th straight day and the Sensex closed at a new 2015 low of 26,523 points. Here are 5 reasons why the Sensex has fallen to a new 2015 low.
RBI may pause on interest rates
There are fears that the Reserve Bank of India may not cut interest rates anytime soon. In fact, many economists believe that the RBI clearly hinted at this by saying it was front loading interest rates. The day the Monetary Policy was announced the Nifty fell a huge 196 points. The only hope for the markets was monetary easing and that may now not happen at least till early next year.
High valuation and poor corporate results
In the last one month the results from top corporates have not been poor, but actually awful. Many had hoped that there would be a quick turnaround in the economy, but, that has not happened. While GDP numbers were buoyant, facts on the ground were totally different. Many analysts have now cut estimates for the Sensex and the Nifty citing weak results.
Poor monsoon forecast
The IMD has forecast deficient monsoons this year. The agricultural economy is already in stress and this was the last thing that analysts wanted to hear.
If monsoons play truant expect further distress in the agricultural sector and the economy as a whole.
Sept may see increase in interest rates in the US
There are fears of an interest rate hike in the US happening earlier than expected. Analysts are betting on the event happening in the month of Sept. But, many foreign portfolio investors may have already begun selling in anticipation of the event this pushing indices lower.
Passage of crucial bills pending
Investors worry over the passage of crucial legislations in parliament, including the Land Acquisition Bill and the GST Bill. Both these bills were to have been passed in the Budget session and the government's inability to get them passed also spooked investors.
There are worries that they may not even sail through in the Monsoon session.