S&P Tumbles 6% as Global Sell-off Jolts Indian Markets
The global financial markets witnessed a tumultuous day on Wednesday, with the S&P 500 plummeting 6% to its worst day since March 2020. This sudden sell-off triggered a widespread rout across markets worldwide, sending Indian indices tumbling. The Sensex dropped over 2,200 points, with recession fears spreading fast and IT and pharma stocks taking a beating.
The S&P 500’s 6% plunge marked its third consecutive day of declines, with the Nasdaq entering bear territory. This sudden downturn in the US markets has sent shockwaves across the globe, with investors bracing themselves for continued volatility across markets worldwide.
The Indian markets, which had been relatively stable in recent times, were not spared from the global sell-off. The Sensex, which had been trading around the 52,000-mark, tanked over 2,200 points to close at 48,852. The Nifty 50, too, suffered a massive blow, plummeting over 700 points to settle at 14,463.
The IT and pharma sectors, which have been major drivers of the Indian market’s growth in recent years, were among the hardest hit. Stocks like TCS, Infosys, and Wipro fell sharply, with some losses of over 5%. The pharma sector, too, saw significant declines, with stocks like Sun Pharma and Dr. Reddy’s Laboratories plummeting.
The global sell-off is attributed to a combination of factors, including rising recession fears, inflation concerns, and the ongoing trade tensions between the US and China. The yield on the 10-year US Treasury bond, which has been rising sharply in recent weeks, has reached its highest level since February 2019. This surge in yields has led to a sharp decline in bond prices, making it more expensive for companies to borrow money.
The sell-off in global markets has also been fueled by the sharp decline in commodity prices. Oil prices, which had been rising sharply in recent weeks, plummeted over 5% to their lowest level since December 2020. This decline in commodity prices has led to a sharp decline in the prices of raw materials, which has had a ripple effect across the global economy.
The Indian markets, which had been relatively stable in recent times, were not prepared for the sudden sell-off. The rupee, which had been trading around the 74-mark against the US dollar, plummeted to its lowest level since August 2020. This decline in the rupee has led to a sharp increase in import costs, which has had a negative impact on the Indian economy.
The RBI, which has been intervening in the foreign exchange market to stabilize the rupee, has been unable to stem the decline. The central bank has been using its foreign exchange reserves to buy dollars and sell rupees, but this has not been able to stem the decline in the rupee.
The Indian government, too, has been trying to contain the fallout from the global sell-off. The finance minister, Nirmala Sitharaman, has been holding emergency meetings with top officials to assess the situation and come up with a plan to stabilize the markets.
In a statement, the finance minister said that the government was committed to maintaining stability in the financial markets and would take all necessary steps to ensure that the economy remains resilient. She also emphasized that the government was working closely with the RBI to stabilize the rupee and address any liquidity issues that may arise.
The Indian markets are likely to remain volatile in the coming days, with investors bracing themselves for continued volatility across markets worldwide. The IT and pharma sectors, which have been major drivers of the Indian market’s growth in recent years, are likely to remain under pressure, with recession fears spreading fast.
However, the Indian markets have shown resilience in the past and have been able to withstand shocks. The government and the RBI are likely to take all necessary steps to stabilize the markets and ensure that the economy remains resilient.
Source: https://www.thecore.in/podcasts/us-stocks-whacked-for-the-third-day-833088
