Stock market indices plummeted on Monday due to weak global cues, driven by the increasing risk of the US economy entering a recession and geopolitical tensions in the Middle East. The S&P BSE Sensex dropped by 1672.88 points to 79,309.07 at 9:15 am, while the NSE Nifty50 fell by 414.85 points to trade at 24,302.85. Additionally, smallcap and midcap stocks, along with other broader market indices, were also trading in negative territory, experiencing declines similar to the benchmarks.
The surge in market volatility due to global uncertainty should be a concern for investors. This has resulted in significant declines across various sectors, including realty, IT, and financial services. The Nifty50 saw gains in companies like Britannia and Sun Pharma, while others such as Tata Motors and Hindalco experienced losses. Dr. V K Vijayakumar of Geojit Financial Services highlighted that the recent rally in global stock markets may be at risk due to the unexpected fall in US job creation and rising unemployment rates, as well as geopolitical tensions in the Middle East.
Vijayakumar mentioned that the unwinding of the Yen carry trade is a significant factor affecting the Japanese market, with the Nikkei crashing by over 4% this morning as an indication of the crisis. He also highlighted that valuations in India, driven by sustained liquidity flows, remain high, especially in the mid and smallcaps segments.
He warned that overvalued segments like Defence and Railways might face pressure, and the buy-on-dips strategy that has been successful in the bull run could be at risk. Investors are advised not to rush into buying during this correction but to wait for the market to stabilize. On the other hand, Sameet Chavan from Angel One emphasized the importance of staying vigilant and monitoring global aberrations that could impact market sentiments and trends. He stressed the need to carefully observe these developments over the weekend to be well-prepared to respond effectively.
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