Amid recession fears in the US, and geopolitical concerns, the market sentiment on Monday remains fairly low.
Sensex and the Nifty 50, Indian stock market benchmarks, on Monday, August 5, dropped down up to 3 per cent in early trade. Amid mounting US recession fears and rising tensions in the Middle East, the Indian stock market has also been mirroring the global trend, which in turn is keeping investors on edge.
The Sensex, on Monday, opened at 78,588.19 and soon crashed 3 per cent to the level of 78,580.46 as compared to the previous close of 80,981.95. As for Nifty 50, it opened at 24,302.85 but fell down over 2 per cent to 24,192.50 as against its previous close of 24,717.70. At around 9:45 am on August 4, the BSE Sensex crashed down at 79,442, while the Nifty 50 was at 24,232. Both the BSE Midcap and Smallcap indices crashed over 2 percent each at that time. Within an hour of the trade, investors lost around ₹10 lakh crore.
The major factors behind the crash of the stock market are plenty, including fears of a recession in the USA, slowdowns in China and Europe, increasing geopolitical tensions and much more. Check out the top 4 factors that have given a blow to the Indian stock market:
Amid ongoing fears of a recession in the US, there’s a higher risk for investors globally, and especially after recent July payroll data showed US unemployment rate jumping to a three-year high of 4.3 per cent. With lowered job creation in the US, the global stock markets are facing a threat. As reported by Bloomberg, Goldman Sachs economists have cited that the probability of a recession in the US might increase to 25 per cent from 15 per cent in the next year itself.
As reported by the media, Iran is planning to take revenge after Israel killed Hamas political chief Ismail Haniyeh. In fact, Haniyeh was killed in Iran itself when he was in the nation to attend the inauguration of newly elected Iranian President Masoud Pezeshkian. Owing to the threats from both the countries, there’s a fear of war, and it has led global investors to keenly look at the situation. Clearly, it has affected the market sentiment strongly.
Reportedly, the Indian stock market's current valuation is stretched. The valuations in India remain on a high, specially in the mid and small-cap segments. However, it will put pressure on the overvalued segments like defence and railways. While this bull run has worked so far, it has now threatened investors, who are now waiting for the market to stabilise.
India Inc.'s June quarter (Q1FY25) result failed to impress the market sentiment. While the current market valuation remains high, there’s a looming fear that earnings might not be able to sustain it.
