Why Is Indian Stock Market Crashing? FM Nirmala Explains!

For the last six or seven weeks, the Indian stock market has been crashing down badly almost in a daily basis. Several lakhs of crores of market capitalisation has been lost already and things are not looking promising in the near future either.

When this matter was brought to discussion in front of the finance minister, Nirmala Sitaraman, she had a very interesting take on what is happening.

According to the finance minister, excess liquidity in India’s equity market has contributed to underperformance and may continue to do so in the future as well.

“Because of the ease of liquidity, ease of availability, people are even exiting easily and convert it to money.” She says.

Nirmala Sitharaman said excess domestic liquidity contributed to stocks underperforming, and also called continued capital outflows one of India’s biggest risks for 2027.

Meanwhile FPIs have already pulled over ₹27,048 crore in a single month, taking 2026 equity outflows past ₹2.2 lakh crore. There is a lot of volatility associated with Indian stock market, and this is getting emphasised with this latest statement from the finance minister.

Despite the economic growth of India as a country, the crucial market indices of nifty and Sensex have been falling consistently for the last couple of years. Nirmala is now saying that easy exits are the main reason behind the same.