S&P tumbles 6% as global sell-off jolts Indian markets
The global financial markets witnessed a significant sell-off on Tuesday, with the S&P 500 plunging 6% to mark its worst day since March 2020. The sharp decline was triggered by a combination of factors, including concerns over inflation, interest rates, and recession fears. The Indian indices followed suit, with the Sensex tumbling over 2,200 points, sending shockwaves across the financial markets.
The S&P 500, which is widely considered a benchmark for the US stock market, has been under pressure in recent days due to growing concerns over the Federal Reserve’s aggressive interest rate hike policy. The central bank has been trying to tame inflation, which has been running above its 2% target for several months. However, the rate hikes have also led to concerns over a potential recession, which has spooked investors and led to a sharp decline in the stock market.
The sell-off in the US markets triggered a global rout, with indices across the world experiencing significant declines. The Nasdaq, which is considered a bellwether for the technology sector, fell into bear territory, with its 20% decline from its peak in November 2021 marking a significant milestone.
The sell-off in the Indian markets was led by the IT and pharma sectors, which are heavily reliant on exports and are sensitive to global market trends. The rupee also weakened against the US dollar, with the exchange rate touching a fresh low of 77.50 per dollar. The decline in the rupee has made imports more expensive, which could lead to higher inflation and interest rates.
The Indian government has been trying to boost economic growth, which has been facing headwinds due to the COVID-19 pandemic and the subsequent lockdowns. The government has implemented several stimulus packages, including a tax cut and increased public spending, to boost economic activity. However, the government’s efforts have been hampered by the decline in global demand, which has led to a sharp decline in exports.
The decline in the Indian markets has also led to concerns over the impact on the country’s economic growth. The Indian economy has been facing a slowdown, with GDP growth declining to 4.6% in the June quarter, the lowest in over six years. The decline in the markets has also led to concerns over the impact on the country’s fiscal health, with the government’s fiscal deficit already running above its target.
The sell-off in the global markets has also led to concerns over the impact on the country’s financial sector. The Indian banks have significant exposure to the IT and pharma sectors, which are heavily reliant on exports. The decline in the rupee has also led to concerns over the impact on the country’s foreign exchange reserves, which have already declined significantly in recent months.
In conclusion, the sell-off in the global markets has sent shockwaves across the financial markets, with the S&P 500 plunging 6% and the Indian indices following suit. The decline has led to concerns over recession fears, inflation, and interest rates, with the Nasdaq falling into bear territory. The Indian government has been trying to boost economic growth, but the decline in the markets has led to concerns over the impact on the country’s economic growth and fiscal health. With the global markets experiencing significant volatility, investors are bracing themselves for continued uncertainty and turbulence in the coming days.
News Source: https://www.thecore.in/podcasts/us-stocks-whacked-for-the-third-day-833088
