S&P tumbles 6% as global sell-off jolts Indian markets
The global markets have been on a rollercoaster ride lately, and yesterday was no exception. The S&P 500, one of the most widely followed indices in the world, plummeted 6% to mark its worst day since March 2020. This sudden and drastic decline triggered a global sell-off, with Indian indices following suit. The Sensex, India’s benchmark stock index, crashed by over 2,200 points, wiping out all the gains made in recent months.
The reasons behind this sudden downturn are complex, but it can be attributed to a combination of factors. The ongoing trade tensions between the US and China, the slowing down of the global economy, and the widening spread of recession fears all contributed to the chaos. The Nasdaq, which is known for its high-flying tech stocks, has now entered bear territory, a term used to describe a decline of 20% or more from its peak.
The IT and pharma sectors, which have been the drivers of the Indian economy in recent years, were particularly hard hit. Stocks like TCS, Infosys, and HCL Technologies tumbled, while pharma majors like Sun Pharma and Dr. Reddy’s Labs also saw their shares decline sharply. The rupee, which has been under pressure for some time now, weakened further against the dollar, making imports more expensive and adding to the overall gloom.
The sell-off in global markets has been a gradual process, with markets around the world experiencing declines in recent weeks. The US markets, in particular, have been under pressure, with the Dow Jones Industrial Average and the S&P 500 both experiencing significant declines. The trigger for the latest sell-off, however, was the sudden and unexpected decline in the US markets on Monday.
The news that the US Federal Reserve had cut interest rates by 25 basis points to stimulate economic growth, but not as much as expected, sent shockwaves through the global markets. The Fed’s move was seen as a sign that the US economy was likely to slow down further, which in turn led to a re-evaluation of the global economic outlook. Investors, who had been betting on a continued economic boom, suddenly found themselves facing a new reality.
The impact of the global sell-off on Indian markets has been significant. The Sensex, which had been trading in the 40,000-42,000 range for some time now, crashed below 39,000 yesterday. The Nifty50, which is a closely watched index of the 50 most liquid stocks on the National Stock Exchange, also fell sharply, declining by over 500 points.
The Indian rupee, which had been under pressure due to a range of factors including the widening current account deficit and the increasing cost of oil imports, weakened further against the dollar. The rupee is now trading at its lowest level against the dollar since October 2018.
The impact of the global sell-off on Indian markets is likely to be felt for some time to come. The IT and pharma sectors, which are major contributors to India’s GDP, are likely to continue to experience declines in the coming days. The slowdown in global trade, which has been a major factor behind the decline in Indian markets, is likely to continue for some time.
In conclusion, the sudden and drastic decline in the S&P 500 and the subsequent global sell-off has sent shockwaves through Indian markets. The IT and pharma sectors, which have been the drivers of the Indian economy in recent years, are likely to continue to experience declines in the coming days. The rupee, which has been under pressure for some time now, weakened further against the dollar, adding to the overall gloom. As investors, it is essential to stay informed and adapt to the changing market conditions.
Source:
https://www.thecore.in/podcasts/us-stocks-whacked-for-the-third-day-833088
