The Indian stock market experienced a dramatic plunge on Monday, as the Sensex crashed by nearly 2,400 points, or 2.95%, and the Nifty 50 fell by approximately 2%, or 414.85 points. This steep decline came as a reaction to unsettling economic data from the United States, which stoked fears of a slowing global economy. The Sensex opened at 78,588.19, hitting an early low of 78,580.46, while the Nifty 50 began the day at 24,302.85, dropping to a low of 24,077.90. Over the past two trading sessions, the Sensex has dropped by 4%, or 3,287.09 points, and the Nifty by 3.27%, or 818.4 points.
The sharp market downturn is largely attributed to recent US employment data that revealed a rise in unemployment to 4.3% and a weaker-than-expected increase in nonfarm payrolls, which has heightened concerns about economic stagnation. “The rally in global stock markets has been driven mainly by expectations of a soft landing for the US economy. This expectation is now under threat due to the cooling labor market,” explained V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Additionally, geopolitical tensions in the Middle East have compounded investor unease. Foreign Institutional Investors (FIIs) have significantly reduced their exposure to Indian equities, selling Rs 3,310 crore worth of shares on August 2 alone, while domestic institutional investors bought Rs 2,965.94 crore worth of shares. So far in August, FIIs have withdrawn Rs 1,027 crore from the local equity market, reflecting a broader risk-averse sentiment.
As a result, domestic equities are experiencing widespread declines, with most BSE and NSE companies trading in the red. The market’s current volatility underscores growing global economic concerns and their impact on investor confidence.