Indian stock markets closed lower for the fifth time in six sessions on Monday with the benchmark Sensex ending at a one-month low below 28,500. The blue chip Nifty index closed below the psychological 8,650. The Sensex has shed 1,500 points since March 4, when it hit a record high above 30,000, but analysts say further selloff cannot be ruled out.

Here’s what weighing on Indian stock markets:

1) Federal Reserve’s Policy Meet: On Wednesday, the US central bank may signal that a rate increase may happen as soon as in June. If interest rates rise in the US, countries like India, which have benefitted from huge foreign flows, will be impacted. According to market veteran Deven Choksey, short-term money may head out of India leading to higher volatility. “Long only funds will not go for panic selloff, but exchange-traded funds may exit in the near term,” he added. Mr Choksey expects the Nifty to trade in a range of 8,500-9,000 range in the near term. (Watch)

2) Good News Priced In: Indian stock markets have stopped reacting to positive news flow, which is a sign of worry, analysts say. Markets fell on March 4, when the Reserve Bank cut interest rates in a surprise move. They also fell on March 13, a day after the Insurance Bill was passed in Rajya Sabha. “You have to worry when stocks stop going up on good news or start going down on good news,” said Madhav Dhar of GTI Capital. The lack of big bang reforms in the Budget also disappointed markets, analysts say. “A lot of things that are truly important, in terms of next-gen reforms, were not even thought out which has been taken negatively by markets,” he added. (Watch)

3) Rupee Hovering Around 63/Dollar: The Indian rupee is one of the best performing currencies in the world, but like other currencies, it has also been inching lower against the greenback. Sharp fall in the rupee is not only bad for importers, but it also leads to loss of confidence in the economy. Rupee depreciation may also force foreign investors to book profits and exit the country.

4) Weak Corporate Earnings: The profitability of Indian companies has been declining for three straight quarters. Not much is expected in the fourth quarter as well; companies will start reporting Q4 numbers in 15-20 days. “Many large companies are still struggling… For infrastructure and cyclical companies, the December quarter may be on subdued side,” said Mr Choksey.

5) New Tax Notices: Prime Minister Narendra Modi’s government has sent two notices demanding a total of Rs 31,000 crore in taxes from Cairn Energy and its former subsidiary Cairn India last week for a transaction that occurred in 2006-07. The tax demands have raised fresh concerns of tax terrorism. Analysts say new tax notices go against the Modi government’s promise of establishing a non-adversarial tax regime and may scare foreign investors away. “The common perception is that the government will say it has nothing to do with the case, but the fact is, the way people look at it is everybody is part of the same system,” said Mehraboon Irani of Nirmal Bang Securities. (Read more)