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The Indian stock market witnessed a significant downturn on [Date], marking the worst single-day decline in three weeks. The Sensex, a key benchmark index representing the 30 largest and most actively traded companies on the Bombay Stock Exchange, plunged by a staggering 931 points, closing at [Closing Value]. This sharp fall was primarily attributed to a surge in foreign portfolio investor (FPI) selling, reflecting growing concerns about the global economic outlook and potential interest rate hikes by major central banks.
FPIs have been net sellers in the Indian market for several weeks, pulling out billions of dollars from the equity markets. This outflow of funds has put significant downward pressure on the Indian rupee, which has also weakened against the US dollar in recent days. The weakening rupee further exacerbates the impact of FPI selling, as foreign investors receive fewer rupees for every dollar they repatriate.
While the global economic environment remains uncertain, with inflation and interest rate hikes posing significant challenges, several domestic factors also contributed to the market slump. These include rising commodity prices, supply chain disruptions, and ongoing geopolitical tensions. The Indian government's recent decision to impose windfall taxes on oil and gas companies has also added to the negative sentiment among investors.
The sharp decline in the Sensex highlights the volatility in the Indian stock market and its vulnerability to global economic shocks. Investors are closely monitoring developments in the US Federal Reserve's monetary policy, as any aggressive rate hikes could trigger further selling in emerging markets like India. The outlook for the Indian market in the coming weeks will depend on several factors, including FPI flows, global economic growth, and the government's policy response to the evolving economic challenges.
Source: Markets log worst 1-day fall in 3 weeks amid FPI exit; Sensex down 931 pts