The ripple effect of a sharp fall in the US market on Wednesday was felt across Asia on Thursday morning, with Japan’s key index Nikkei 225 falling 4 per cent and China’s Shanghai Composite dropping 5.23 per cent.
India’s benchmark indices Sensex and Nifty, in the midst of their longest losing streak since February this year, declined by over 2 per cent.
Domino effect
Just when traders were beginning to feel that India’s market sell-off was overdone — with key indices declining from their peak by nearly 14 per cent since August — came Wednesday’s US market plunge and its domino effect across Europe and Asia, market analysts told
The Sensex fell 759 points, or 2.19 per cent, to close at 34,000. The Nifty fell 225 points, or 2.16 per cent, to close at 10,234. In the US, the Dow Jones was down 813 points, or 3.15 per cent. The tech-heavy Nasdaq fell 315 points, or 4 per cent, on shooting benchmark bond yields and a strengthening of the dollar against all the major currencies.
“If the US market crash continues, all bets are off the table for indices across the world,” said Rohit Srivastava, a fund manager at Sharekhan-BNP Parias.
The futures indices of Dow Jones and Nasdaq, which trade round the clock, were down over 0.5 per cent on Thursday. At 9.30 pm IST, the Dow was down 140 points, or 0.5 percent. The Nasdaq was treading water, and was up by just 2 points.
US President Donald Trump blamed Federal Reserve Chief Jerome Powell for the market crash on Wednesday, terming the central banker’s aggressive stance in favour of interest rate hikes “crazy” and “a big mistake.”
“In India, the market sentiment is shattered as high-flying financial stocks have had a bad fall,” said Rajesh Baheti, MD, Crosseas Capital Services.
“Several consumption-themed stocks domestically are still trading at price-to-earnings multiples of 50 and above. When they fall, it can be said that the markets have bottomed out. Also, stability will come once markets in the US give up 12-15 per cent in the ongoing correction. As of now, that is a long way off,” he added.
Mid-cap share sale
Continuous selling of several mid-cap shares by non-banking finance companies (NBFCs) and brokers, placed as margin by some of the leading high net worth investors to avail further leverage, is being termed as another reason for the market mayhem in India.