S&P tumbles 6% as global sell-off jolts Indian markets
The global financial markets have been witnessing a tumultuous ride lately, with the S&P 500 index plunging 6% on Tuesday, marking its worst day since March 2020. This sudden sell-off has triggered a global rout, with Indian markets following suit. The Sensex, India’s premier stock index, shed over 2,200 points, wiping off a significant chunk of its recent gains.
The escalation of recession fears has been attributed to the sudden plunge in global markets. The US markets, in particular, have been under intense pressure, with the S&P 500 index tumbling over 6% in a single day. This marks the third consecutive day of losses for the index, which has sparked concerns about the overall health of the global economy.
The Nasdaq, which is heavily weighted with technology stocks, has entered bear territory, falling over 10% from its recent highs. This has led to a surge in volatility across markets worldwide, with investors bracing themselves for continued uncertainty.
The sell-off in Indian markets was widespread, with IT and pharma stocks being among the hardest hit. The Nifty IT index shed over 5%, while the Nifty Pharma index fell by more than 4%. The losses were led by major IT players like TCS, Infosys, and Wipro, which fell by 5-6% each. Pharmaceutical companies like Sun Pharma, Dr. Reddy’s, and Cipla also witnessed significant losses.
The carnage was not limited to individual stocks, however. The broader market indices also bore the brunt of the sell-off. The Sensex, which had been hovering around the 60,000 mark just a few days ago, sank to its lowest level in over a month. The Nifty 50 index, which tracks the 50 most liquid stocks on the NSE, fell by over 2.5%.
The sudden plunge in global markets has been attributed to a combination of factors, including rising recession fears, increasing inflation concerns, and the ongoing trade tensions between the US and China. The yield curve inversion, which is a widely-followed indicator of recession fears, has also been a major concern. The inversion, which occurs when long-term bond yields are lower than short-term rates, suggests that investors are increasingly wary of the outlook for the economy.
The impact of the global sell-off on Indian markets has been significant, with investors opting for safe-haven assets like gold and the US dollar. The rupee, which had been strengthening in recent weeks, also fell by over 1% against the dollar, further exacerbating the losses in the market.
Despite the sudden plunge in global markets, many analysts believe that the Indian economy is better equipped to handle the challenges ahead. The country’s strong domestic consumption story, coupled with its growing services sector, has been seen as a major buffer against the global headwinds.
However, the recent sell-off has also underscored the importance of proactive policy measures to mitigate the impact of the global downturn. The Reserve Bank of India, which has been grappling with inflation concerns for some time now, is likely to cut interest rates further to stimulate growth. The government, too, is expected to announce a series of measures to boost economic activity and support vulnerable sections of society.
In conclusion, the recent sell-off in global markets has been a major wake-up call for investors worldwide. The sudden plunge in the S&P 500 index has triggered a global rout, with Indian markets following suit. While the recession fears are spreading fast, the Indian economy is expected to weather the storm better than many of its global peers. However, the recent developments have also underscored the importance of proactive policy measures to mitigate the impact of the global downturn.
Source: https://www.thecore.in/podcasts/us-stocks-whacked-for-the-third-day-833088
