Well, the stock market is crashing down because of the pandemic which happened around the world that has led to the index drop severely in a day or few days of trading. So, the crash is more sudden than a stock correction when the market falls some percentage down over days, weeks, or even months. Also, the Stock market crashes can affect the economies and leave the stock in your portfolio which are worthless. Also, dividing the stocks will help not from protecting the crash process and suddenly all sectors of the stock market will be down. Below are the reasons why is the stock market down.
By varying interest rates, declining economy, inflation, deflation, tax increases, financial and political shocks, changes in the economic policy, changing the value of the money which are the leading factors that can cause a decline in the share market. These situations are always a possibility and are beyond the control of the investors.
Supply and Demand
This is another major factor that plays a role in the share market is down. The price of a share changes because there is a change in the supply and demand equilibrium. When the demand for a stock is high, but supply low, it causes the price of those shares to rise. Similarly, if the supply is high, but the demand is low the share price decreases. This scenario becomes a hundred times bigger when there is a disconnect between the demand and supply on a large scale between various companies that affect the entire share market.
One of the biggest reasons for share markets to go down is global economic trends. Indian economy is exposed to global markets with many foreign investors investing huge capital into Indian businesses. So, when the world economy grows or declines, it has a significant impact on the shared of that company which results in causes an effect on the domestic stock market. This step is the reason for why is the stock market down.
Factors that affect stock prices often go beyond the economic conditions of foreign countries. These factors could include a radical change in the government of a stable country, wat, internal conflicts, unforeseen natural disasters, and more. There is no predicting these events and what kind of impact they will have on our economy and subsequently on our share markets.
Share market crashes are temporary and do not last for too long and important not to panic and make decisions in hurry. Hope that I have covered all the topics in my article about why is the stock market down. Thanks for reading!