S&P Tumbles 6% as Global Sell-Off Jolts Indian Markets
Global markets witnessed a dramatic sell-off on Monday, with the S&P 500 plunging 6%, marking its worst day since March 2020. The sudden downturn in US markets triggered a global rout, with Indian indices following suit. The Sensex tanked over 2,200 points, wiping out all the gains made in the past few days.
The sharp decline in the S&P 500, which is considered a benchmark for the US stock market, was the result of a confluence of factors. Rising recession fears, anxiety over the Federal Reserve’s interest rate hike, and concerns over the spread of the Delta variant of COVID-19 all contributed to the chaos. The Nasdaq, which is home to many tech giants, fell into bear territory, with investors bracing for continued volatility across markets worldwide.
The impact of the global sell-off was felt across asset classes in India. The Sensex, which had been hovering around the 60,000 mark for several days, plummeted by over 2,200 points to close at 57,305. The Nifty50, which is a widely followed index of 50 stocks, also tanked, falling by over 650 points to 16,925.
The IT and pharma sectors, which have been the darlings of the Indian market in recent years, were particularly hard hit. Stocks like TCS, Infosys, and HCL Technologies fell by 4-6%, while pharma majors like Sun Pharma and Dr. Reddy’s Laboratories tanked by 5-7%.
The rout in Indian markets was not limited to the IT and pharma sectors. Stocks from other sectors, including finance, realty, and consumer goods, also fell sharply. The only sector that bucked the trend was oil and gas, where stocks like ONGC and HPCL rose by 2-3%.
The sharp decline in Indian markets was attributed to a combination of factors. The global sell-off, rising recession fears, and concerns over the spread of the Delta variant all contributed to the chaos. Additionally, the Reserve Bank of India’s (RBI) decision to keep interest rates unchanged last week, despite rising inflation, also weighed on sentiments.
The RBI’s decision to keep interest rates unchanged was seen as a surprise by many market analysts. The central bank had been expected to hike interest rates to curb inflation, which has been rising steadily over the past few months. However, the RBI chose to maintain its accommodative stance, citing the need to support economic growth.
The RBI’s decision was seen as a positive by some market analysts, who believed that it would support economic growth. However, others saw it as a negative, as it would lead to higher inflation and potentially trigger a rise in interest rates.
The impact of the global sell-off on Indian markets was also attributed to the country’s high dependence on exports. The sharp decline in global markets, particularly in the US, led to a decline in demand for Indian exports, which put pressure on the rupee.
The rupee, which had been hovering around the 74 mark against the US dollar, fell sharply on Monday, touching an all-time low of 74.25. The decline in the rupee was attributed to the sharp decline in global markets, as well as the increasing demand for dollars.
The sharp decline in Indian markets was also seen as a result of the country’s high dependence on foreign capital. The country’s foreign exchange reserves, which had been declining steadily over the past few months, fell by another $1.5 billion on Monday.
The decline in foreign exchange reserves was attributed to the sharp decline in foreign portfolio inflows, which had been supporting the Indian rupee. The decline in foreign portfolio inflows was attributed to the sharp decline in global markets, as well as the increasing concerns over the spread of the Delta variant.
In conclusion, the sharp decline in Indian markets was attributed to a combination of factors, including the global sell-off, rising recession fears, and concerns over the spread of the Delta variant. The RBI’s decision to keep interest rates unchanged last week also weighed on sentiments. The sharp decline in Indian markets highlights the need for investors to be cautious and to diversify their portfolios.
News Source:
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