Benchmark equity indices, Sensex and Nifty took a sharp plunge on Monday during the early trading hours as recession fears continue to weigh heavily on global markets
Benchmark indices opened the week on a negative note, with BSE Sensex and NSE Nifty falling nearly 2 per cent due to weak global trends. This downturn comes as US economy faces a potential slowdown. Meanwhile, foreign investors also took a U-turn, becoming net sellers in the market.
The 30-share BSE Sensex dropped by nearly 2,401 points to 78,580 in early trading session, while the NSE Nifty declined by almost 490 points to 24,228. Among the Sensex pack, Tata Motors, Tata Steel, JSW Steel, Adani Ports, Maruti and Reliance Industries were the biggest decliners.
In Asian markets, Seoul, Tokyo and Hong Kong were trading sharply lower while Shanghai quoted higher.
The US markets ended significantly lower on Friday.
"The rally in the 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 the US unemployment rate to 4.3 per cent. Geopolitical tensions in the Middle East also are a contributing factor," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,310 crore on Friday, according to exchange data.
"Despite talks of a potential double-rate cut in September, bearish sentiments persist, with Fed-funds futures indicating a 71.5 per cent probability of a 50-basis point cut at the FOMC’s September meeting. Anxiety remains high, especially after Friday's unexpectedly weak July jobs report, suggesting that volatility will be the hallmark of the day," Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said.
Global oil benchmark Brent crude climbed 0.35 per cent to USD 77.08 a barrel.
Amid widespread selling pressure, the BSE benchmark plunged 885.60 points or 1.08 per cent to close at 80,981.95 on Friday. The broader Nifty of NSE dropped 293.20 points or 1.17 per cent to end at 24,717.70.
(With inputs from PTI)