S&P tumbles 6% as global sell-off jolts Indian markets
The S&P 500, a benchmark index of the US stock market, witnessed its worst day since March 2020 as it plunged 6% on Friday, triggering a global sell-off that sent shockwaves through Indian markets. The Sensex, India’s primary stock index, tumbled over 2,200 points, wiping out all the gains made in the past week.
The sudden and sharp decline in the S&P 500 was a result of a perfect storm of factors, including increasing recession fears, inflation concerns, and a sharp rise in bond yields. The yield on the 10-year US Treasury note, a benchmark for global borrowing costs, surged to its highest level since 2018, causing concern among investors about the potential impact on the global economy.
The sell-off in US markets was so severe that it drew comparisons to the 2020 pandemic crash, when the S&P 500 fell by 11.3% in a single day. The Dow Jones Industrial Average and the Nasdaq Composite Index also suffered significant losses, with the latter now in bear territory.
As news of the US market rout spread, it did not take long for Indian markets to follow suit. The Sensex, which had been trading steadily for the past few days, plummeted over 2,200 points, with all its components trading in the red. The Nifty 50, a closely watched index of the top 50 companies listed on the National Stock Exchange (NSE), also fell sharply, shedding over 700 points.
The IT and pharma sectors, which have been among the top performers in recent years, bore the brunt of the sell-off. Stocks like TCS, Infosys, and HCL Technologies fell by 5-7%, while pharma majors like Sun Pharma, Dr. Reddy’s, and Cipla declined by 4-6%.
The sharp decline in Indian markets can be attributed to the growing concerns about the global economy, which are having a ripple effect on domestic markets. The US-China trade war, Brexit uncertainty, and rising oil prices have all contributed to a sense of unease among investors, leading to a flight to safety and a sharp decline in risk assets like stocks.
Recession fears, in particular, are spreading fast, with many economists and analysts warning of a potential slowdown in the coming quarters. The yield curve, which measures the difference between short-term and long-term bond yields, has also inverted, a widely followed indicator of recession.
As investors grapple with the uncertainty, they are bracing for continued volatility across markets worldwide. The Nasdaq, which has been a key index for tech stocks, is now in bear territory, and many analysts expect more pain in the coming days.
The sharp decline in Indian markets also raises concerns about the impact on the economy. The Indian rupee has already fallen sharply against the US dollar, and a further decline could lead to higher inflation and interest rates.
In conclusion, the sharp decline in the S&P 500 and Indian markets is a stark reminder of the risks and uncertainties that come with investing in the markets. As recession fears spread and global markets continue to be volatile, investors would do well to exercise caution and diversify their portfolios.
Source: https://www.thecore.in/podcasts/us-stocks-whacked-for-the-third-day-833088
