Stock market benchmark indices Sensex and Nifty crashed nearly 3 percent on Monday, following extremely weak trends in global equity markets amid fears of a slowdown in the US economy.

This steep decline in Indian equity market on the first trading session of the week resulted in a loss of nearly Rs 15 lakh crore for investors.

“What happened over the weekend?” was the first question on investors’ minds.

Experts attribute the fall in the Indian stock market to global uncertainties, particularly signs of a potential recession in the US economy.

RUCHIT JAIN, Lead-Research, 5Paisa Capital: “So there were negative news flows from various parts of the globe, which led to sharp sell off in the global equity markets. Indian markets too have witnessed very sharp up moves in the recent past, if you look at the last couple of months after the election results, Indian markets rallied very significantly, they continued the up move post the budget too. However much of the positives were already factored in and the events were behind us. Hence this global market volatility has led to a sharp down move or corrective phase in our markets too.”

The July employment data in the US released last Friday showed the unemployment rate jump to near a three-year high of 4.3 per cent.

After that Goldman Sachs economists have increased the probability of a recession in the US to 25 per cent from 15 per cent in the next 12 months. Apart from fear of a US recession, rising tensions in the Middle East is another factor behind the turmoil in the stock markets.

According to some experts the valuations in Indian stock market are quite inflated due to sustained liquidity flows which is poised for a good correction. On the technical front, Nifty has closed below the 20 day simple moving average, which is an indicator of weak sentiments in the market. Some experts however, predict a bounce back in the coming days citing strong fundamentals of the India economy.

Expert’s have advised retail investors to avoid panic buy or sale and stay invested in quality stocks.