Indian bourses faced a significant downturn on Monday, with the BSE Sensex plummeting 2,393 points to 78,588, while the Nifty50 index fell 405 points to 24,302 in early trading. The Sensex opened lower by 1,310.47 points or 1.62 percent at 79,671.48, and the Nifty was down 404.40 points or 1.64 percent at 24,313.30. The market breadth was negative, with about 442 shares advancing, 2,368 shares declining, and 154 shares remaining unchanged.
Among the major gainers on the Nifty were Apollo Hospital and Sun Pharma. On the losing side were Maruti Suzuki, Tata Motors, Hindalco, Titan Company, and Tata Steel.
“The rally in global stock markets has been driven mainly by consensus expectations of a soft landing for the US economy. This expectation is now under threat with the fall in US job creation in July and the sharp rise in US unemployment rate to 4.3%. Geopolitical tensions in the Middle East also are a contributing factor. Another significant factor is the unwinding of the Yen carry trade which is bleeding the Japanese market. The crash in Nikkei by above 4% this morning is an indicator of the crisis in the Japanese market. Valuations in India, driven mainly by sustained liquidity flows, continue to be high, particularly in the mid and smallcaps segments. The overvalued segments of the market like Defence and Railways are likely to come under pressure. The buy-on-dips strategy which has worked well in this bull run, is likely to be threatened now. Investors need not rush to buy in this correction. Wait for the market to stabilise,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
In Asia, the Korea Exchange implemented sidecar trading curbs on the KOSPI market, suspending program trading for five minutes from 11:00 to 11:05 a.m. local time. Japanese stocks tumbled to their weakest levels since early January, extending last week’s selloff triggered by the rout in global stock markets and worries about investments funded by a cheap yen being unwound. The Nikkei share average is down 15% in three sessions, poised for its biggest three-day plunge since 2011, with banking stocks leading the decline.
Share markets across Asia fell sharply, while bonds saw a boost as concerns about a potential U.S. recession drove investors away from riskier assets and increased bets on a swift reduction in interest rates to support economic growth. Continuing the trend from Friday, Nasdaq futures dropped by 2.27%, S&P 500 futures fell 1.41%, EUROSTOXX 50 futures decreased by 0.6%, and FTSE futures were down by 0.2%.
