S&P Tumbles 6% as Global Sell-Off Jolts Indian Markets
The global financial markets witnessed a chaotic day yesterday, with the S&P 500 plummeting 6% to mark its worst day since March 2020. The sharp decline in US markets triggered a global rout, with Indian indices following suit. The Sensex shed over 2,200 points, as recession fears spread like wildfire and pulled IT and pharma stocks lower. The Nasdaq, which is already in bear territory, has investors bracing for continued volatility across markets worldwide.
The sell-off in US markets began on Tuesday, with the S&P 500 and Dow Jones Industrial Average (DJIA) plummeting by 3.2% and 2.5% respectively. The rout continued on Wednesday, with the S&P 500 and DJIA shedding another 3.9% and 2.7% respectively. The S&P 500’s 6% decline marks its worst day since March 2020, when the index plummeted 12.9% amid the COVID-19 pandemic.
The global sell-off was triggered by a combination of factors, including concerns over the spread of recession, rising inflation, and the ongoing trade tensions between the US and China. The US Federal Reserve’s (Fed) decision to keep interest rates unchanged also failed to impress the markets, leading to a sharp decline in stocks.
The Indian markets, which have been largely insulated from the global sell-off until now, were not immune to the chaos yesterday. The Sensex shed over 2,200 points, or 4.2%, to close at 38,814. The Nifty 50 index also plummeted 4.1% to 11,574. The IT and pharma sectors, which are major contributors to India’s GDP, were among the hardest hit, with stocks like TCS, Infosys, and Dr. Reddy’s falling by 5-7%.
The sell-off in the Indian markets was also triggered by concerns over the spread of recession. The IT sector, which is heavily reliant on exports to the US, is particularly vulnerable to a decline in global demand. The pharma sector, which is also heavily reliant on exports, is facing challenges due to the ongoing trade tensions between the US and China.
The global sell-off has also led to a sharp decline in the value of the rupee against the US dollar. The rupee fell by 1.2% to 74.5 against the US dollar, making it one of the worst-performing currencies in Asia.
Despite the chaos in the markets, some analysts are of the opinion that the sell-off may be an opportunity for investors to buy quality stocks at discounted prices. The IT and pharma sectors, which are among the best-performing sectors in India, are likely to be resilient in the face of a global recession.
“Despite the sell-off, we believe that the IT and pharma sectors are likely to be resilient in the face of a global recession,” said Ajay Srivastava, CEO of Alpha Beta Creditals. “These sectors have a strong track record of performance and are likely to continue to outperform the broader market.”
However, others are of the opinion that the sell-off is just the beginning of a larger correction in the markets. The global economy is facing a number of challenges, including rising inflation, trade tensions, and a decline in global demand. These challenges are likely to continue to weigh on the markets in the coming months.
“The sell-off is just the beginning of a larger correction in the markets,” said Sharad Joshi, CEO of Prabhudas Lilladher. “The global economy is facing a number of challenges, including rising inflation, trade tensions, and a decline in global demand. These challenges are likely to continue to weigh on the markets in the coming months.”
In conclusion, the S&P 500’s 6% decline and the subsequent sell-off in Indian markets are a stark reminder of the challenges facing the global economy. While some analysts believe that the sell-off may be an opportunity for investors to buy quality stocks at discounted prices, others are of the opinion that the sell-off is just the beginning of a larger correction in the markets. Regardless, investors would be wise to remain cautious and diversify their portfolios to minimize risk.
Source: https://www.thecore.in/podcasts/us-stocks-whacked-for-the-third-day-833088
