Why Stock Market Keeps Falling

Last Updated on February 25, 2025 by monetizedeal

The Indian stock market has declined in the last few months which is raising concerns among investors. When we talk about India’s stock market crashes this may happen when global economic, domestic financial instability and sudden shifts of investors combine together. The Sensex is dropping over 1,100 points. These market fluctuations are very common like in 2024 the Sensex experienced a huge downfall due to general election results.

In such situations, investors are advised to stay informed and updated when making any kind of investment. However, several factors cause market downfall, including global and domestic challenges. In this article, we will highlight the key factors that cause the stock market downfall.

Causes of Stock Market Decline

Here is the list of the following reasons that cause the stock market decline.

1. US Tariff

The stock market mainly the metal stocks are under pressure due to Donald Trump’s announcement. He announced that his government would impose a 25% tariff on steel by the US. Moreover, the US President confirmed that the new tariffs would apply to all countries. The specific timeline for when it gets implemented have not been announced by them.

2. Weaker Urban Demand

The another main reason for this market slowdown is weak urban demand. It is mainly affected by the high prices and slow income growth. The India’s economic growth is also likely to slow down to 6.4% this financial year. It is one of the lowest economic growth in four years.

3. Rupee Under Pressure

The value of Indian currency went low of 87.94 against the dollar which has impacted the stock market. The Dollar index has increased to 108.32. The Indian currency loosed at 87.43/$ on Friday which is nearly down 1% for the week. Moreover, it is one of the worst declines since 2022.

4. Withdrawal of Foreign Investments (FIIs)

Foreign Institutional Investors (FIIs) have withdrawn money out of the Indian market. This year FIIs have withdrawn over $5 billion which is for global uncertainties and better investment opportunities. This withdrawal has weakened the Indian stock market. In the first quarter of 2025, FIIs withdrew INR 45,000 crores which has impacted the Indian market like the NIFTY and Sensex.

5. Uncertainty About US Fed Rate Cuts

The uncertainty about the US Federal Reserve will cut the interest rates may also be affecting the Indian market. However, a slowdown in US inflation the Fed has indicated that it would not lower the rates until inflation concerns get eased. This situation is preventing domestic investors from buying stocks and counteracting the foreign selling pressure.

Tips to Protect Your Portfolio During a Stock Market Crash

Here are some tips for investors to use to save their portfolio during a Stock Market Crash.

• Variations– As an investor you can spread your investments across different fields like in assets, classes and regions to manage the losses arising due to one class by balancing with the profits from others.
• Explore Non-Market Linked Investment Options– You can share some of your funds to non-market linked investment options like corporate bonds, real estate, and securitised debt instruments are more to get fixed and predictable returns.
• Regular Monitoring– investors need to keep themselves updated on their profits and market status. So they can adjust it according to changes in market conditions.
• Take Benefit of Cost Averaging– You can invest a fixed amount like SIPs at the time to average out prices and reduce the impact of market downfall.

Prediction About the Indian Stock Market Recovery

The Indian stock market is expected to recover in 2025 as inflation becomes stable, interest rate ease and economic growth get strengthens. Some sectors like tech, green energy, and AI could lead the rebound. Geopolitical stability and strong corporate earnings may further boost investor confidence. However, market instability may continue which makes strategic investing crucial for long-term gains.

Conclusion

It is important for investors to understand about stock market crashes. The market crashes can be problematic but you must not get affected by such investment decisions. There are various options you can choose to overcome such situations. We have mentioned some tips that can help investors to understand about market conditions.