Stock Market Crash Today
Stock Market Crash Today: Sensex Plunges by 2,400 Points Amid US Recession Fears
Stock Market Crash Today: Globally, investors have turned risk-averse after a softer-than-expected jobs report in the US heightened worries over slowing economic growth. The domestic stock market plunged over 2 percent on Monday on heavy selling by investors after weak jobs data in the US raised concerns about slowing economic growth in the country. Benchmark indices Sensex and Nifty have fallen for the second consecutive day.
Extent of the Plunge: Sensex and Nifty
The market barometers Sensex and Nifty experienced massive selling in the early morning trades on Monday. The BSE’s 30-share Sensex tanked nearly 2.95 percent, or 2,393.76 points, to open at 78,588.19. It hit a low of 78,580.46 in early morning trades. The broader Nifty 50 declined nearly 2 percent, or 414.85 points, to open at 24,302.85. It fell to a low of 24,077.90 in early trades. In the last two trading sessions, the Sensex has plummeted 4 percent, or 3,287.09 points, while the Nifty has declined 3.27 percent, or 818.4 points. Among the BSE and NSE companies, the majority of firms were trading in red in morning trades.
Reasons for the Stock Market Crash
Globally, investors have turned risk-averse after a softer-than-expected jobs report in the US heightened worries over slowing economic growth. The unemployment rate in the US rose to 4.3 percent in July, and nonfarm payroll employment edged up by 114,000, stoking fear of a deteriorating labor market and a slowdown in the economy.
“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 US unemployment rate to 4.3 percent,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Nomura, in a report, stated that the July employment report in the US showed rapid cooling in the labor market. The data appear noisy, but the balance of risks has skewed to the downside. “Beyond the headline miss in job gains and the unemployment rate, the household survey indicated a rise in job losses, typically a warning sign for a pending downturn. An unusual rise in temporary layoffs and evidence of a negative weather effect raise the possibility that the rise in job losses is just a blip, rather than the start of a worsening trend,” Nomura added.
Another factor contributing to the fall in the market is the geopolitical tensions in the Middle East.
Foreign Institutional Investors (FIIs) Activity
As per stock exchange data, foreign institutional investors (FIIs) offloaded Rs 3,310 crore of domestic shares on August 2. On the other hand, domestic institutional investors bought Rs 2,965.94 crore worth of shares. According to the National Securities Depository Ltd (NSDL) data, FIIs have pulled out Rs 1,027 crore from the local equity market so far in August.
Outlook and Conclusion
The current market scenario presents a challenging environment for investors, with global economic uncertainties and geopolitical tensions weighing heavily on sentiment. While the immediate outlook may appear bleak, it is essential for investors to adopt a long-term perspective and consider the underlying fundamentals of their investments. Historically, markets have shown resilience and the ability to recover from significant downturns.
Investors are advised to stay informed, diversify their portfolios, and consult with financial advisors to navigate these volatile times effectively. As the global economic landscape continues to evolve, remaining cautious yet opportunistic can help in mitigating risks and capitalizing on potential recoveries.