BSE Sensex and Nifty, dropped in trade on Monday, in the wake of increasing US recession fears and international factors like geopolitical tension in the Middle East and trouble over reverse Yen carry trade. BSE Sensex and NSE Nifty both dropped around 3 percent.
Following Santosh Meena, Head of Research at Swastika Investment Ltd, the global market downfall to the unification of negative factors, saying, “The global market is reeling as bears enter with a mixture of bad news.
Reasons for the Drop:
- US Recession Worries: Recent reports showed that jobs in the US are not growing much, making people afraid that the US economy might slow down. Big financial companies like Goldman Sachs and JPMorgan are worried and think the Federal Reserve might need to lower interest rates to help the economy.
- Japan’s Economic Problems: Japan’s stock market, called the Nikkei, fell a lot. It went down by over 12% today, adding to a big drop from Friday. This drop was because of worries about Japan’s money policies, especially a recent interest rate increase.
- Middle East Conflicts: Problems in the Middle East are also affecting global markets and making things worse.
- Reverse Yen Carry Trade: This is when changes in Japan’s interest rates might cause market problems. Investors are worried about this, which also contributed to the market drop.
Impact on Indian Markets:
- Market Drop: The BSE Sensex ended the day at 78,759.40 points, down by 2,222.55 points, or 2.74%. It went as low as 78,295.86 points during the day. The NSE Nifty ended at 24,055.60 points, down by 662.10 points, or 2.68%. This was the biggest drop in one day since June 4, 2024, when the market fell by more than 5% because of election results.
- Investor Losses: The drop made investors lose over Rs 15 lakh crore in just one day. The total value of all BSE-listed companies fell to Rs 441.84 lakh crore. Over two days, the losses added up to more than Rs 19 lakh crore.
- Sector Impact: Many areas were hit hard, including banking, IT, metals, and oil & gas. Smaller and mid-sized companies also lost value, with the BSE smallcap index falling 4.21% and the midcap index dropping 3.60%.
- Foreign Institutional Investors: Foreign investors sold stocks worth Rs 3,310 crore on Friday, making the market worse.
Views on the Indian Stock Market:
Resilience: Some experts think the Indian stock market is still strong compared to others. Chris Wood from Jefferies says that India’s market is doing well because it has a lot of local investors. The market is still attracting good investment even with global problems.
Strong Basics: Tanvi Kanchan from Anand Rathi Shares and Stock Brokers says that Indian markets have strong basics and local support, which help balance out the problems from foreign investors pulling out money.
Investment Advice: Sandeep Raina from Nuvama Professional thinks this might be a good time to invest if you missed earlier chances. He suggests looking at areas like pharmaceuticals and consumer goods. Siddhartha Khemka from Motilal Oswal Financial agrees, saying that current prices are fair and could be good for long-term investors.
Conclusion
The Indian stock market has been hit by global problems, but experts think that the stock market’s strong local support and basics help it stay stable. Investors are advised to stay calm and look for long-term chances despite the current ups and downs.
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