S&P tumbles 6% as global sell-off jolts Indian markets
The global financial markets witnessed a tumultuous Tuesday as the S&P 500 plummeted 6%, marking its worst day since March 2020. This sudden and drastic decline triggered a widespread sell-off, with Indian indices following suit and plummeting to new lows. The Indian stock market, in particular, faced a severe setback, with the Sensex dropping over 2,200 points. The sudden and dramatic downfall in global markets has raised concerns about the prospects of a recession, causing investors to grow increasingly anxious and uncertain about the future.
The S&P 500, which is widely regarded as a benchmark for the US stock market, has been on a downward trajectory for several days, with yesterday’s 6% decline marking its third consecutive day of losses. This dramatic fall has pushed the index into bear territory, a term used to describe a market decline of 20% or more from its peak. The Nasdaq, another key US index, has also been severely impacted, with a decline of over 7% yesterday, pushing it into bear territory as well.
The global sell-off was sparked by a combination of factors, including concerns over the US-China trade war, the slowing down of economic growth in major economies, and the ongoing uncertainty surrounding the COVID-19 pandemic. The market volatility was further exacerbated by comments from Federal Reserve Chairman Jerome Powell, who expressed concerns over the potential risks of a prolonged economic downturn.
The Indian stock market, which has been relatively resilient in the face of global market volatility, was not immune to the sell-off. The Sensex, which has been steadily rising over the past few months, plummeted over 2,200 points, or around 4.5%, to close at 38,964. The Nifty 50, another key Indian index, also dropped sharply, falling by over 5.5% to close at 11,484.
The IT and pharma sectors, which are two of the largest and most dominant sectors in India, were particularly hard hit by the sell-off. Stocks like TCS, Infosys, and Wipro, which are considered bellwethers of the IT sector, dropped by 4-6% each, while pharma stocks like Sun Pharma and Dr. Reddy’s Labs fell by 5-7% each. The decline in these sectors was largely driven by concerns over the potential impact of a global recession on their business prospects.
The decline in global markets has also had a significant impact on the Indian rupee, which has been steadily weakening over the past few months. The rupee hit a fresh low of 76.12 against the US dollar yesterday, as investors fled to safer assets like the dollar. This decline has also led to a rise in inflation, which is expected to have a negative impact on the Indian economy.
Despite the current market volatility, experts believe that India’s economy is better placed to weather the storm than many other major economies. India’s GDP growth rate, although slowing down, remains relatively strong compared to other major economies. Additionally, the Indian government’s recent budget, which included a series of measures to stimulate economic growth, has been widely praised by experts.
However, experts also caution that the current market volatility is likely to continue for some time, and investors would be wise to adopt a cautious approach. “The current market volatility is likely to continue for some time, and investors should focus on building a diversified portfolio that can weather the storm,” said Ramesh Damani, a well-known Indian investor and entrepreneur.
In conclusion, the recent global sell-off has had a significant impact on Indian markets, with the Sensex falling sharply and IT and pharma stocks taking a hit. While the Indian economy is better placed to weather the storm than many other major economies, experts believe that the current market volatility is likely to continue for some time. Investors would be wise to adopt a cautious approach and focus on building a diversified portfolio that can weather the storm.
Source: https://www.thecore.in/podcasts/us-stocks-whacked-for-the-third-day-833088
