The global financial markets experienced a significant downturn on Monday, with the Indian stock market witnessing a sharp sell-off that led to a bloodbath on D-Street. The Sensex plummeted to an intraday low of 78,295 points, marking a decline of 2,686 points, while the Nifty dropped 823 points to 23,893 levels. This drastic fall in the benchmark indices was mirrored in the broader market, with the MidCap index slipping by 4.23% and the SmallCap index sinking by 4.58% during intraday trading.
Analysts attributed the sell-off in the Indian markets to the negative sentiment prevailing in global markets, particularly in the US, where major indices like the Nasdaq and S&P 500 witnessed significant losses following the Federal Reserve’s decision to maintain interest rates. This decision raised concerns about the impact of rising borrowing costs on the economy and led to a wave of selling across different asset classes.
On the BSE Sensex, leading stocks such as Adani Ports, Tata Motors, Tata Steel, SBI, Infosys, and JSW Steel experienced declines ranging from 5% to 6%. Similarly, index heavyweights like Reliance Industries, ICICI Bank, Larsen and Toubro, and HDFC Bank also registered losses in the range of 2% to 4%. The spike in volatility was evident as the India VIX surged to 50.40% intraday, reflecting the heightened uncertainty and risk aversion among investors.
The negative sentiment extended beyond Indian shores, with Asian markets also witnessing heavy losses on Monday. Indices like the Nikkei 225 and Topix in Japan recorded significant declines, with the Nikkei tumbling up to 13%, marking the worst drop since the ‚Black Monday‘ of 1987. Other major Asian markets such as South Korea’s Kospi, Hong Kong’s Hang Seng, and Australia’s ASX 200 also experienced sharp declines ranging from 3% to 11%.
The global market turmoil was attributed to a combination of factors, including concerns about a potential economic slowdown in the US, ongoing tensions in the Middle East, and the unwinding of the Yen carry trade in Japan. Analysts highlighted the need for caution amid the heightened volatility, emphasizing the importance of waiting for better entry points before making investment decisions.
Despite the short-term turbulence, experts like Tanvi Kanchan from Anand Rathi Shares and Stock Brokers remained optimistic about the long-term outlook for the Indian stock market. Kanchan viewed the sell-off as a temporary phenomenon driven by profit booking and advised investors to consider staggered entry strategies during volatile periods. From a technical perspective, analysts identified key support levels for the Nifty at 24,075 and 23,900, with resistance levels at 24,800-25,000.
In conclusion, while the recent market turmoil has raised concerns about a potential correction in global markets, experts remain positive about the long-term prospects of the Indian stock market. Investors are advised to exercise caution, monitor key support and resistance levels, and consider a strategic approach to navigate the current market volatility.