Saying it a bear phase means taking things too lightly. The right words for the present state of stock market in India is “stocks under crossfire.” And of course there is no remedy in sight. The stocks have started a downhill journey. Otherwise how BSE Sensex, after crossing 21000 marks, lost more than a third in a matter of months. And how is the crossfire started?
Firstly, it was too steep a gradient over too small a time that characterized the uphill journey to 21000. Too many retail investors invested between the levels 16000 to 21000 making the stocks vulnerable to quick falls defying possibility of stabilization.
Secondly, too much of talk of N-Deal and related pitfalls of instability in the Government contributed negatively to the market sentiments. This, coupled with approaching parliamentary election and the possibility of hung Parliament, pressed the investor into selling mode, booking profits wherever possible.
Thirdly, credit squeeze by RBI, increasing REPO and CRR rates, time and again, in turn highly reduced liquidity in the stock market.
Fourthly, Excessive issue of IPOs at astronomical values sucked too much liquidity from the market leaving the market dry for normal trading activity.
Finally, high inflation, caused by heavily increasing food and commodity prices, as well as disastrous rise in crude prices put the final nail in the stock-market coffin.
Each of these five factors mentioned above blasted the stock market in their own way bringing the market under the worst crossfire in recent times.