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The Indian stock market experienced a significant downturn on November 21, 2024, with the Sensex plummeting over 900 points and the Nifty falling by nearly 180 points. This sharp decline was attributed to a confluence of factors, primarily the unfolding Adani bribery scandal, escalating geopolitical tensions, and persistent foreign institutional investor (FII) outflows. The indictment of Gautam Adani and seven others by the US Securities and Exchange Commission (SEC) for allegedly paying $265 million in bribes to secure lucrative government contracts sent shockwaves through the market. This revelation triggered a massive sell-off in Adani Group stocks, with several companies hitting their lower circuit limits, resulting in a significant loss of investor confidence and contributing heavily to the overall market decline.
The escalating Russia-Ukraine conflict further exacerbated the already fragile market sentiment. The use of Storm Shadow missiles by Ukraine and Russia's revised nuclear doctrine injected significant uncertainty into the global economic landscape. This geopolitical instability prompted a cautious approach among investors, leading to further selling pressure. Market analysts highlighted the growing concern about the potential escalation of the conflict and its ripple effects on global markets, particularly on energy prices and supply chains. This uncertainty led many investors to adopt a 'wait-and-watch' strategy, exacerbating the market downturn. The interconnectedness of global markets meant that anxieties in one region quickly spilled over into others, amplifying the negative impact on the Indian stock market.
Adding to the pressure, foreign institutional investors (FIIs) continued their selling spree, though at a slightly reduced pace compared to previous days. While domestic institutional investors (DIIs) remained active buyers, the sustained FII outflows dampened overall market sentiment. This outflow of foreign capital further underscored the prevailing uncertainty and risk aversion among global investors. The weakening trends in Asian markets also played a significant role. Disappointing revenue figures from Nvidia, a major US technology company, added to the global sense of pessimism, further pressuring Asian and consequently Indian markets. The downward trend in major Asian markets like Tokyo, Shanghai, and Hong Kong reflected the broader global unease, amplifying the negative impact on the Indian stock market.
Beyond the immediate triggers, the upcoming state assembly election results in Maharashtra also contributed to the market's nervousness. Analysts noted that a negative outcome for the ruling party could further dampen investor sentiment, adding another layer of uncertainty to an already volatile market. The potential for political shifts and policy changes added another level of risk to the investor landscape. This underscored the close relationship between political stability and economic confidence in the Indian market. The technical outlook for the Nifty index, as analyzed by Axis Securities, suggested key support levels. Staying above these levels could indicate a potential recovery, while falling below them might trigger further profit-booking and a deeper correction. This technical analysis provided a short-term perspective on the market's potential trajectory.
In conclusion, the sharp decline in the Indian stock market on November 21, 2024, was a multifaceted event driven by a combination of domestic and global factors. The Adani bribery scandal emerged as a major catalyst, triggering a significant sell-off in Adani Group stocks and impacting overall market confidence. Escalating geopolitical tensions stemming from the Russia-Ukraine conflict added to the uncertainty, prompting a cautious approach from investors. Persistent FII outflows, weakened Asian markets, and anticipation surrounding state election results further contributed to the downward pressure. While the market exhibited signs of slight recovery during the day, the underlying factors causing the initial plunge highlight the inherent volatility and interconnectedness of global financial markets. This incident serves as a stark reminder of the numerous factors that can influence investor sentiment and the importance of careful risk management in navigating such turbulent periods.
Source: Stock Market In Red: Know Key Reasons Why Sensex Crashed 900 Points Today