News

Published: April 12, 2024
Updated: April 12, 2024

Sensex and Nifty 50 Plunge Amid Global Economic Concerns of War looking in the Middle East

Global Economic Turbulence

The Indian stock market experienced a significant downturn on Friday, April 12, as global economic uncertainties rattled investor confidence. The surge in the US dollar and long-term bond yields, fueled by hotter-than-expected US CPI prints for March, set the stage for widespread selling across Indian benchmarks.

Fed Rate Cut Expectations Diminish

Expectations of a rate cut in the US in June faded away, as the US dollar and 10-year treasury yields traded near five-month highs. Investors now anticipate the Federal Reserve to delay rate cuts, leading to concerns that the central bank may not significantly reduce rates. It's projected that the Fed may opt for a reduction of less than 50 basis points this year.

Impact on Indian Markets

The Indian market's downward trajectory was further exacerbated by caution ahead of the quarterly earnings report of IT giant TCS. Amidst predictions of modest revenue and profit growth, concerns mounted over a variety of issues including inflation, geopolitical tensions, and escalating conflict between Israel and Iran.

Market Performance

The Sensex plummeted by 793 points, or 1.06%, closing at 74,244.90, while the Nifty 50 also suffered a significant loss of 234 points, or 1.03%, ending at 22,519.40. The broader market indices, BSE Midcap and Smallcap, also experienced declines, reflecting the overall negative sentiment.

Market Capitalization Decline

The total market capitalization of BSE-listed firms witnessed a substantial drop, falling to nearly ₹399.7 lakh crore from ₹402.2 lakh crore in the previous session. Investors bore the brunt of this decline, losing approximately ₹2.5 lakh crore in a single session.

Sectoral Performance

All major sectoral indices ended in the red, with Nifty Pharma, PSU Bank, Oil & Gas, Media, and FMCG witnessing declines of over 1% each. Nifty Bank closed with a loss of 0.86%, highlighting the widespread nature of the market downturn.

Expert Insights

Experts, pointed to various factors contributing to the market's performance, including concerns over delayed US rate cuts, escalating Middle East tensions, and subdued Q4 earnings projections.

The Indian stock market's downturn on April 12 underscored the influence of global economic factors and domestic uncertainties on investor sentiment. With challenges ranging from inflationary pressures to geopolitical tensions, market participants face a complex landscape ahead, marked by cautious optimism and strategic manoeuvering.