Indian Stock Markets See Sharp Decline Amid Global Recession Worries
The last two trading days saw the key Indian indices witness sharp declines wiping out billions in investor wealth. On Monday, the benchmark BSE Sensex plunged nearly 2400 points while the Nifty50 index fell over 400 points. This comes after weak unemployment data from the US raised concerns about an economic slowdown.
The job additions in the US last month were lower than expected while the unemployment rate saw a slight increase. This worried investors that the largest economy may be heading towards a recession dampening global growth. A Nomura report highlighted the cooling labor market in the US could be a warning sign of difficult times ahead.
Back home, both the headline indices opened with cuts of nearly 3% each on Monday. Most sectoral indices on the NSE were trading deep in the red with metals, banks and financials being the top losers. The broader markets also joined in on the sell-off with the midcap and smallcap indices down over 2%. Heavyweight Reliance dragged the most on the indices.
Foreign investors continued their selling spree by offloading shares worth over 3000 crore in the past two sessions amplifying the selling pressure on domestic bourses. However, domestic institutions provided some support by absorbing a portion of the shares sold by FIIs. The Indian currency also fell to a new low against the US dollar amidst the risk-off sentiment.
Overall, doubts over global economic health weighed heavily on investor sentiment sparking a heavy downtrend in Indian equities for the second straight day. The road ahead depends on whether further signs emerge of a slowdown in major economies like the US and China.
