Indian Equity Indices Plunge Amid US Recession Fears

Mumbai, August 5: Indian equity markets closed significantly lower on Monday, driven by concerns over a potential US recession and global market turmoil.

At the close of trading, the Sensex fell 2,222 points, or 2.74%, to 78,759, while the Nifty dropped 662 points, or 2.68%, to 24,055.

The sharp decline in the market led to a reduction in the Bombay Stock Exchange’s (BSE) market capitalization, which fell to Rs 441 lakh crore from Rs 457 lakh crore in the previous session, resulting in a loss of Rs 16 lakh crore in investor wealth.

Sectoral and Index Performance

Significant selling pressure was observed across midcap and smallcap stocks. The Nifty Smallcap 100 index declined by 858 points, or 4.57%, to 17,942, while the Nifty Midcap 100 index fell by 2,056 points, or 3.55%, to 55,857.

Market experts attributed the downturn to global market cues, including disappointing US job data that heightened fears of a recession, with the unemployment rate rising to 4.3%. Concerns were also raised about potential reverse carry trades in the Yen following a rate hike by the Bank of Japan and escalating geopolitical tensions in the Middle East.

Broad Market Decline

All major indices closed in the red, with the most significant declines seen in PSU Bank, Metal, Realty, Energy, Infrastructure, Auto, and IT sectors. Twenty-eight out of the 30 Sensex stocks ended lower.

Key losers included Tata Motors, Tata Steel, SBI, Power Grid, Maruti Suzuki, JSW Steel, Infosys, L&T, and Tech Mahindra. In contrast, HUL and Nestle were among the few stocks that closed in the green.

Technical Analysis

Rupak De, Senior Technical Analyst at LKP Securities, noted that the Nifty slipped back into its rising channel on the daily time frame due to heavy selling. The Nifty found initial support at the 50 EMA before closing slightly higher.

De added, “The RSI is in a bearish crossover and continues to fall. Sentiment is likely to remain weak in the short term and could further decline below 23,900. Support levels are at 23,900 and 23,700, while resistance is expected at 24,200 and 24,500.”