Why Stock Market is down today? Reason for Nifty fall

Why stock market is down today? Each time the market falls, everyone wants to know why the market is falling and more importantly – whether it’ll fall more.

On this page, we’ll try to analyse each time the market falls by 1% or more. In other words, if Nifty falls by more than 1%, we will post our analysis at the bottom of this page.

30 April 2021: The market has crashed by 1.8% today. A major fall. But did your portfolio or mutual funds also fall by more than 1%? The answer most probably will be ‘no’, unless you have given significant allocation to banking stocks.

After a strong up-move for 4 days, Nifty fell by 1.77% today. But the smaller indices held up much better. Nifty Next 50 was down 0.5%, Mid and Small cap indices held up even better falling just 0.4%.

Even though Corona is raging through the country, the breath of the market remains positive. The trend continues to be upwards, as Nifty hasn’t yet broken any major level – which could suggest a potential turnaround towards the downside.

It appears like a normal correction. If there is a reason to worry, we will be the first to caution on this page. Until then, hold on to your long term positions. Keep strict stop losses on trades and continue to ride the rally.

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Disclaimer: We do not post buy or sell recommendations here. Please consult your financial advisor.

Why does the stock market fall?

The answer is simple.

In the short term, the market moves because of buyers, sellers and their sentiments (i.e emotion, opinion or feeling).

When the strength of selling is more than the strength of buying, the market tends to slide downwards.

This leads to negative sentiment, which results in more selling.

As the selling increases, the sentiment worsens – finally leading to what is called as ‘panic selling’ – where people fear the worst and begin to sell.

This is exactly what happened in March 2020, when the fear of Covid-19 and economic depression was so severe – that people were just selling their shares and exiting the market.

When the sentiment is like what it was in March 2020, there are only sellers and very few buyers.

When the market is rising, the opposite happens.

The sentiment was terrible in March 2020, but once the market started to rise – sentiments slowly began to improve. And now, 5 months after the crash – the market is back to where it was.

If you stopped tracking the market in February and returned in September – many stocks have gone past their all-time high prices.

Market Falls are faster than rises

It’s like taking the stairs to go up and coming down on the elevator (lift). The fall is quick. The rise is usually much slower.

Another example could be a roller coaster. The move upwards is always slow and steady, the fall is quick and brutal.

Months and years of gains can be wiped out in days. This is why people fear the fall.

Before you even get a chance to react, the market could be down 10-20-30%.

Successful investors can handle market falls

If you want to be a successful investor or trader – you have to understand, rise and fall are part of the stock market.

Learning to handle the volatility is part of the learning process in the first few years.

Remember, if the market has to rise higher, it has to fall before going up. It’s like a punch – you have to move your hand backwards and then push it forward with force. That force to rise, only comes after a pullback.

Why Stock Market is down today?

The analysis in this section will be fundamental as well as technical (charts).

Stock Market Fall 17th March 2021

Pre-Budget Market Crash (21st to 29th January)

1.06% Nifty Fall on 18 January 2021

Two consecutive days (Friday and Monday) the Nifty has corrected by more than 1%. This is a healthy correction for the market – which has run up a lot in the last few months.

The correction could continue for a few days before the budget, but like mentioned on Friday – the bigger trend is still in the upward direction.

The charts haven’t yet given any indication of a big reversal.

After such a large rally, profit booking is normal. The market is preparing itself for the budget and the following days and weeks can be highly volatile.

We maintain – the breath of the broader market is largely positive. Even when the Nifty corrects, there are stocks which are showing huge gains. Tech companies have posted good results, and financial results of other major companies too is expected to be good. Things are getting back to normal after Covid.

1.11% Nifty Fall on 15 January 2021

3.14% Nifty Crash on 21 December 2020

1.5% Nifty Fall on 25 November 2020

1.4% Market Fall on 26 October 2020

2.5% Market Fall on 15 October 2020

3% Market Crash on 24 September 2020

Market Fall on 21 September 2020

Market Fall on 4 September 2020

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