New Delhi: The Sensex and Nifty, two stock market benchmark indices, plummeted by almost 3 percent on Monday due to extremely negative trends in global equity markets, driven by concerns over a potential slowdown in the US economy. The BSE Sensex fell 2,222.55 points or 2.74 pc to close at 78,759.40, its lowest level in over a month, in its biggest one-day drop since June 4, 2024. Throughout the day, it dropped by 2,686.09 points or 3.31 pc to 78,295.86.
The NSE Nifty dropped by 662.10 points, a decrease of 2.68 pc, to end at 24,055.60. Throughout the day, it dropped by 824 points or 3.33 percent to 23,893.70. Nifty experienced its most severe one-day decline since June 4, 2024, when markets plunged over 5 percent because of the general election outcomes. Analysts suggested that market sentiment was negatively impacted by a more than 12 percent drop in Japan's Nikkei and geopolitical tensions in the Middle East.
Seoul, Tokyo, Shanghai, and Hong Kong all experienced significant declines in Asian markets. On Monday, Japan's main stock index dropped by 12.4 percent, contributing to a worldwide market decline triggered by worries from investors about a possible recession in the US economy.
A recent report revealing a significant slowdown in hiring by US employers last month caused turmoil in financial markets, erasing the previous excitement that had propelled the Nikkei 225 to record highs of over 42,000 in recent weeks.
Monday saw the Nikkei ending at 31,458.42, a decrease of 4,451.28 points. Its value decreased by 5.8 per cent on Friday, marking its biggest two-day drop in history. The largest drop in a single day was a decrease of 3,836 points, equivalent to 14.9 percent, on October 19, 1987, known as "Black Monday." Despite concerns that it might signal a global recession, it turned out to be only a temporary setback. European markets were trading with significant declines as well. On Friday, the US markets saw a significant decrease before closing.
Tata Motors from the Sensex pack saw a decrease of more than 7 per cent. Adani Ports, Tata Steel, SBI, Power Grid, JSW Steel and Maruti also experienced significant drops in value. Nevertheless, Hindustan Unilever and Nestle finished in a position of strength.
Recessionary fears in the US and the rapid rise of the yen caused global markets to become cautious, prompting the unwinding of carry trades after disappointing job statistics. Vinod Nair, Head of Research at Geojit Financial Services, mentioned that the domestic market also experienced the effects and these are predicted to have an impact in the near future.
The worldwide oil standard, Brent crude, dropped by 1.93 percent to USD 75.33 per barrel. The BSE smallcap index saw a decline of 4.21 per cent, while the midcap index fell by 3.60 per cent in the overall market. During extensive selling activity, the BSE main index dropped by 1.08 percent on Friday. The wider Nifty index on the NSE decreased by 1.17 percent. During two consecutive sessions until Monday, Nifty and Sensex have both experienced a correction of almost 4 per cent.
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