Indian Stock Market Crash Today: From Bull to Bear? Why the Market Fell Today? Indian Stock Market Faces Steepest Single-Day Drop in Recent Memory. In a dramatic turn of events, the Indian stock market experienced a substantial decline on Monday, August 5, as both the Sensex and Nifty indices fell sharply. This downturn mirrored global market trends, driven by concerns over a potential US recession and escalating tensions in the Middle East.
Market Performance Overview
The benchmark BSE Sensex plummeted by 2,223 points, or 2.74%, closing at 78,759.40. Similarly, the NSE Nifty50 dropped 662 points, or 2.68%, ending the day at 24,055.60. During intraday trading, the situation was even more severe, with the Sensex falling as much as 2,686 points (3.3%) to hit a low of 78,296, while the Nifty breached the 24,000 level, touching 23,894.
Indian Stock Market Crash Today
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The broader markets were not spared either. The Nifty MidCap 100 and SmallCap100 indices suffered declines of 3.60% and 4.21%, respectively. This market-wide selloff resulted in investors losing approximately ₹15 lakh crore in a single trading session.
Only five stocks in the Nifty 50 index managed to close in positive territory, with Hindustan Unilever leading the gainers with a 1.02% increase. On the flip side, Tata Motors was the biggest loser, dropping 7.40%, followed by ONGC and Adani Ports.
Global Market Scenario
The Indian market’s decline was part of a larger global trend. Asian markets, in particular, faced significant pressure:
- Japan’s Nikkei 225 and Topix indices dropped as much as 12%, marking their largest two-day fall since 1987. Both indices are now approaching bear market territory, having fallen almost 20% from their all-time highs set on July 11.
- South Korea’s Kospi shed 4.7%, while Australia’s ASX200 fell 3%.
- Hong Kong’s Hang Seng index edged 1% lower.
US markets also showed signs of distress, with futures for the Dow Jones Industrial Average, S&P 500, and Nasdaq-100 all indicating significant drops for the upcoming session.
Also Read: Expert Predictions for Suzlon Energy – Decline Expected in August
Key Factors Driving the Market Decline
US Recession Fears
Recent US job data has raised alarm bells about the health of the world’s largest economy. The unemployment rate jumped to 4.3% in July, nearing a three-year high. This has led to increased concerns about a potential recession, with Goldman Sachs economists raising their probability estimate of a US recession in the next year from 15% to 25%.
Geopolitical Tensions
The situation in the Middle East has become increasingly volatile. The recent killing of Hamas leader Ismail Haniyeh in Tehran has led to vows of vengeance from Iran and its allies. Israeli Prime Minister Benjamin Netanyahu’s statement about Israel being in a “multifront war against Iran’s axis of evil” has further heightened fears of potential conflict escalation in the region.
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Valuation Concerns
Experts have been warning about stretched valuations in the Indian stock market, particularly in the mid and small-cap segments. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that the overvalued segments of the market, such as defense and railways, are likely to come under pressure.
Mixed Q1 Results and Earnings Concerns
The June quarter results for Indian companies have been mixed, failing to provide a strong positive sentiment to the market. There are growing concerns that corporate earnings may not be able to sustain the current high market valuations, potentially triggering further profit-booking.
Technical Factors
The Nifty 50 falling below its 20-day moving average is seen as a bearish signal by technical analysts. Shrikant Chouhan of Kotak Securities pointed out that this breach, along with the formation of a long bearish candle on daily charts, supports the possibility of further weakness.
Also Read: Expert Predictions for Suzlon Energy – Decline Expected in August
Market Outlook and Investor Advice
Given the current market conditions, experts are advising caution. The volatility index, India VIX, saw a steep surge of 42%, indicating that the path ahead for the Nifty 50 could be significantly volatile.
Analysts suggest that 24,000 is a crucial level for the Nifty. A sustained close below this level could potentially lead to further declines towards 23,900 or even 23,800. However, there’s also the possibility of a short-term pullback rally due to oversold conditions.
Investors are advised to exercise patience and not rush into buying during this correction. Instead, they should wait for the market to stabilize before making significant investment decisions. The buy-on-dips strategy, which has been effective in the recent bull run, may face challenges in the current market scenario.
Also Read: What is the Next Target of IREDA and NTPC? Expert Opinions and Key Information
As global economic concerns persist and geopolitical tensions remain high, investors should stay vigilant, diversify their portfolios, and carefully assess their risk tolerance in this challenging market environment. The coming days will be crucial in determining whether this is a short-term correction or the beginning of a more prolonged bearish phase in the Indian stock market.
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