Monday Madness: The stock market crash. Four factors account for the steep decline in the Nifty and Sensex.
Stock Market Crash today and Sensex Nifty Drop: According to Mishra, investors should exercise caution and stay away from highly overpriced industries and themes like railroads and defense.
The sell-off in Asian markets caused the Indian markets to plummet precipitously. The combination of dismal US job statistics and geopolitical uncertainty in West Asia caused the Nifty 50 to plummet below the 24,000 mark on Monday morning. The index’s decline from its peak of 25,078.30 has been more than 3.5%.
Similarly, the Sensex intraday dropped 3% from its opening value of 78,580.46. According to Ajit Mishra, Senior Vice President of Research at Religare Broking, “mostly export-oriented packs are facing more pressure today, like IT, however defensives like pharma and FMCG are showing noticeable strength.”
The worldwide stock market rise, according to V K Vijayakumar of Geojit Financial Services, has been primarily propelled by collective anticipation of a gentle landing for the US economy. The decline in US job creation in July and the steep increase in the US unemployment rate to 4.3% have put this projection in jeopardy.
These four factors explain why the markets are collapsing.
- Concerns about the US economy: A weaker-than-expected jobs data for July raised fears of a recession in the US, which led to a significant decline in the country’s stock markets on Friday. With a 2.43% decline, the Nasdaq finished at 16,776.16. That is a decrease of over 10% from its peak. The S&P 500 finished at 5,346.56 after declining 1.84%. With a 1.51% decline, the Dow Jones Industrial Average closed at 39,737.26.
- Tension in West Asian geopolitics This is an additional factor contributing to the market’s increased selling pressure. Following the killing of Ismail Haniyeh, the political bureau chief of the Palestinian Hamas party, concerns increased. As a result, the price of crude oil is also rising.
- Unwinding of the Yen trade: The unwinding of the Yen trade has caused the Japanese market to implode, and the Nikkei had its largest two-day decline ever. According to Vijayakumar, the Nikkei’s Monday morning 4% plunge is a sign of the Japanese market’s crisis. With the Nikkei 225 and Topix dropping more than 10%, the sell-off persisted. Since July 11, when the benchmark indexes reached their highest point, they have dropped by over 20%.
- The yield on the US 10-year Treasury bond dropped to its lowest point since December: The market players purchased bonds as a safety measure, starting a safe-haven purchasing trend. The US Federal Reserve’s decision to maintain interest rates at current levels this week has raised fears that it was a mistake.
Now, what tactic should you employ?
“We believe the drop could continue due to many global challenges. Investors had to exercise caution and stay away from extremely overbought industries or themes, such as railroads and defense, Mishra continued, explaining the current market strategy.
Tanvi Kanchan, Head of UAE Business & Strategy at Anand Rathi Shares and Stock Brokers, countered that there is no indication of a long-term panic mode set in Indian shares and that this sell-off is more of a short-term volatility due to profit booking. “For investors looking to enter the equity market, a staggered entry during volatile periods can be considered,” the speaker said.
Market Crash: The Monday morning more than 4% decline in the Nikkei is a sign of a crisis in the Japanese market.
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