Why is the Indian stock market declining? The Sensex fell 1,300 points in three days, and the Nifty 50 dropped close to 25,300. Described

The Nifty 50 also fell by almost a percent to an intraday low of 25,318.45, and the Sensex fell more than 600 points, or almost 1%, to an intraday low of 82,670.95. The Nifty Midcap 100 and Nifty Smallcap 100 indices both fell by as much as 1%, indicating that the selloff was widespread.

On Friday, November 7, the local stock market indexes, the Sensex and the Nifty 50, saw significant losses during intraday trading, extending their losing streak to the third straight session.

The Sensex fell more than 1,300 points, or 1.6%, during these sessions, while the Nifty 50 fell more than 440 points, or 1.7%.

The Nifty 50 also fell by almost a percent to an intraday low of 25,318.45 on Friday, while the Sensex fell more than 600 points, or almost 1%, to an intraday low of 82,670.95. The Nifty Midcap 100 and Nifty Smallcap 100 indices both fell by as much as 1%, indicating that the selloff was widespread.

Why is the stock market in India declining?
Let's examine the five main causes of the decline in the Indian stock market:

1. Inadequate global cues
One of the main causes of the current decline in the Indian stock market is weakness in international markets.

Overstretched valuations of Wall Street, the "mother market," have caused caution on a global scale.

Following an overnight decline of up to 2% on Wall Street, major Asian stock markets saw significant losses on November 7, with the Nikkei in Japan and the Kospi in Korea both plummeting 2%.

The ongoing US government shutdown, which started on October 1 and is currently the longest in history, has produced a lack of economic data and is creating a sense of uncertainty in the market, while investors are now searching for new triggers amid dwindling prospects for another rate cut by the US Federal Reserve.

2. Tech and commodities companies do not dominate the Indian market.

Tech businesses have played a major role in this year's worldwide market rise, driven by a great deal of confidence about artificial intelligence (AI). Strong international competitors in the market are absent from India. According to experts, this is one of the causes of the Indian stock markets' poor performance thus far this year.

"The rise is being driven globally by two sectors: commodities and technology. There aren't many well-known brands from India in these categories. "This is one of the reasons we are underperforming," stated Shankar Sharma, a successful investor and the creator of the AI-tech startup GQuant.

3. The "macro" component
Due to low inflation, India's GDP increased by an astounding 7.8% in the first quarter of the current fiscal year (Q1FY26).

However, compared to 9.6% during the same quarter in the previous fiscal year, nominal GDP growth (economic expansion before accounting for inflation) decreased to 8.8% in Q1FY26. This suggests that the economy is still rather fragile. The market's gains are being constrained by worries about the Indian economy.

In the meantime, after reaching a 15-year high in August, India's services sector dropped to a five-month low in October.

"The Indian market is an aging bull market. Economic growth is misleading: nominal GDP growth is extremely low, while real GDP growth appears to be strong. Earnings are actually driven by nominal GDP growth. The risk appetite is also kept low by stretched values, according to Sharma.

4. Constant outflow of foreign capital
Despite inconsistent profits, fluctuations in the Indian rupee, and dwindling hopes for additional rate reduction by the US Federal Reserve, foreign institutional investors (FIIs) are still selling Indian stocks.

FIIs have sold ₹6,214 crore worth of Indian stocks so far in November. Since July of this year, they have been selling Indian stocks, dumping a total of almost ₹1.4 lakh crore in cash.

"The DII and investor purchases in the market are being overtaken by the massive shorting by FIIs. According to VK Vijayakumar, Chief Investment Strategist at Geojit Investments, "the success of the FII strategy of sustained selling in India and moving money to cheaper markets has empowered them to continue the strategy and continue shorting the market."

5. The ongoing ambiguity surrounding the US-India trade agreement
The ongoing uncertainty around a possible trade agreement between India and the US continues to be a significant obstacle for the Indian stock market, despite numerous encouraging signs and the seeming goodwill between Prime Minister Narendra Modi and US President Donald Trump.