Sensex, Nifty nosedive nearly 3% amid global equity rout on US growth concerns

Mumbai: Stock market benchmark indices Sensex and Nifty crashed nearly 3 per cent on Monday following extremely weak trends in global equity markets amid fears of a slowdown in the US economy. he Indian rupee closed at its weakest level on record.
The 30-share BSE Sensex plummeted 2,222.55 points (or 2.74 per cent) to settle at over a month's low of 78,759.40, marking its worst single-day retreat since June 4, 2024. During the day, it tanked 2,686.09 points or 3.31 per cent to 78,295.86.

The NSE Nifty slumped 662.10 points or 2.68 per cent to settle at 24,055.60. During the day, it tumbled 824 points or 3.33 per cent to 23,893.70. Nifty also saw its worst single-day fall since June 4, 2024, when markets crashed more than 5 per cent due to general election results.

An over 12 per cent plunge in Japan's Nikkei and geopolitical tensions in the Middle East dented market sentiment, analysts said. In Asian markets, Seoul, Tokyo, Shanghai and Hong Kong settled sharply lower. Japan's benchmark stock index plunged 12.4 per cent on Monday, compounding a global market rout set off by investor concerns that the US economy could be headed for recession.

A report on Friday showing hiring by US employers slowed hiring last month by much more than expected convulsed financial markets, vanquishing the euphoria that had taken the Nikkei 225 to all-time highs of over 42,000 in recent weeks.

On Monday, the Nikkei closed down 4,451.28 points at 31,458.42. It had dropped 5.8 per cent on Friday, making this its worst two-day decline ever. Its worst single-day rout was a plunge of 3,836 points, or 14.9 per cent, on October 19, 1987, a global markets crash that was dubbed Black Monday but proved to be only a temporary setback despite fears it might have augured a worldwide downturn. European markets were also trading with deep cuts. The US markets ended significantly lower on Friday.

From the Sensex pack, Tata Motors slumped over 7 per cent. Adani Ports, Tata Steel, SBI, Power Grid, JSW Steel and Maruti were the other big laggards. However, Hindustan Unilever and Nestle ended in positive territory.

"The global markets were jolted into a cautious mode by recessionary fears in the US following disappointing job statistics and unwinding of carry trade following the rapid rise of the yen. The effects were felt by the domestic market as well and are expected to impact in the near term," said Vinod Nair, Head of Research, Geojit Financial Services.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,310 crore on Friday, according to exchange data. "The global market is reeling as bears enter with a cocktail of bad news. The fear of a reverse Yen carry trade, following an interest rate hike in Japan, was the initial catalyst. This was compounded by fears of a recession in the US after extremely poor jobs data, which spooked market sentiment," said Santosh Meena, Head of Research, Swastika Investmart Ltd.

Global oil benchmark Brent crude declined 1.93 per cent to USD 75.33 a barrel.

In the broader market, the BSE smallcap gauge dropped 4.21 per cent and midcap index plummeted 3.60 per cent.

Rupee at records low
The Indian rupee closed at its weakest level on record on Monday pressured by likely outflows from local equities and the unwinding of carry trades as fears of an economic slowdown in the United States roiled markets.

The rupee ended at its all-time low of 83.8450, down 0.1% from its close at 83.8025 in the previous session. Aggressive dollar bids from foreign banks, likely on behalf of custodial clients, pressured the rupee through the day's session, a foreign exchange trader at a state-run bank said. But intervention from the Reserve Bank of India helped limit the rupee's losses, traders said.

The RBI "for now is protecting (the rupee) near 83.85 levels but it's quite likely that it moves to 84 this week if the pressure continues," a trader at a foreign bank said.