Indian stock markets are facing significant losses today, extending declines for the second consecutive session. The Sensex fell by 1.57% to 79,707.96, while the Nifty dropped by 1.53%, closing at 24,339.70. This downturn follows a broader global trend, with US futures and Asian indexes also experiencing sharp declines. Notably, Nasdaq futures were down over 2%, and the Nasdaq index has entered correction territory, falling 10% from its all-time highs. Asian markets also showed significant declines, with Japan’s Nikkei and Topix indices dropping up to 7%.
Here are four key reasons behind today’s market plunge:
- US Recession Fears: Concerns are mounting about a potential US recession. The Sahm Recession Indicator, a gauge of recession risk, has surpassed the 0.5 mark, signaling increased recession probabilities. This worry is compounded by a substantial slowdown in US job growth, with only 114,000 jobs added in July, well below the 215,000 monthly average from the previous year. Additionally, the US unemployment rate has risen to approximately 4.3%, the highest level since October 2021.
- Bank of Japan Policy Change: The Bank of Japan’s recent decision to raise its benchmark interest rate has led to a stronger yen against the US dollar. This policy shift has negatively impacted Japan’s Nikkei 225 index, which fell significantly as a result.
- Middle East Tensions: Geopolitical tensions have escalated in the Middle East following Iran, Hamas, and Hezbollah’s vows of retaliation against Israel. This instability could drive oil prices higher, even though they are currently at eight-month lows due to reduced demand.
- Weak Q1 Earnings Reports: Corporate earnings for the quarter ending June have been disappointing, with a year-on-year growth rate of only 2%. For the 30 Nifty 50 companies that have reported earnings, there has been a modest 0.7% year-on-year growth but a substantial 9.4% quarter-on-quarter decline in net profits.
These factors combined are contributing to the current volatility in the Indian stock markets, reflecting broader economic and geopolitical uncertainties.
I am Aparna Sahu
Investment Specialist and Financial Writer
With 2 years of experience in the financial sector, Aparna brings a wealth of knowledge and insight to Investor Welcome. As an accomplished author and investment specialist, Aparna has a passion for demystifying complex financial concepts and empowering investors with actionable strategies. She has been featured in relevant publications, if any, and is dedicated to providing clear, evidence-based analysis that helps clients make informed investment decisions. Aparna Sahu holds a relevant degree or certification and is committed to staying ahead of market trends to deliver the most up-to-date advice.
