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Markets: Recession fears in the US, M-E crisis tank global indices, including Sensex, Nifty

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Virendra Pandit

New Delhi: Reports about a possible recessionary trend kicking off in the US, the escalating crisis in the Middle East, and domestic reasons caused a meltdown in world markets on Monday, as Sensex and Nifty crashed by nearly 3 percent each.

Key factors behind the stock market crash included fears of a US recession enveloping the global economy following increased unemployment, massive job cuts in the technology sector, including IT, Japan’s yen-carrying trade unwinding, geopolitical tensions in various countries, overvaluation, and lackluster quarterly results.

Stock markets in India might suffer again on Tuesday in the wake of political uncertainties in an unstable Bangladesh where incumbent PM Hasina Wazed quit and fled on Monday, with the army bracing to rule the country whose garment-based, export-oriented economy has plummeted in recent months, a major reason for anti-quota agitation of students.

In India, Blue-chip stocks like Tata Motors and Tata Steel suffered the most. Equity benchmark indices, BSE Sensex and the NSE Nifty fell sharply on Monday to end in the red, in tandem with losses among global peers. At close, the Sensex was at 78,768.42, down as much as 2,222.5 points, or 2.74 percent. The index plunged nearly 3 percent to hit the day’s low of 78,296 on Monday.

The Nifty50 also tumbled 662 points or 2.68 percent to settle at 24,055.6. After posting a gap-down opening, the index tumbled 3.33 percent to hit Monday’s low of 23,894, the media reported.

India VIX ended at 20.37 points, up 42.23 percent, indicating massive volatility in the markets. The volatility index zoomed 61 percent intraday to 23.15 levels, marking its largest increase since 2015.

Bears took over as 45 out of the 50 listed stocks on Nifty50 posted a negative closing. Tata Motors, ONGC, Adani Ports, Tata Steel, and Hindalco were the top laggards, clocking up to 7-per cent loss.

From the BSE space, 28 out of the 30 constituents of the Sensex ended lower, with Tata Motors and Adani Ports being the top laggards. Only Hindustan Unilever and Nestle India managed to end in the green.

In the broader markets, the Nifty SmallCap and MidCap indices fell 4.5 percent and 3.5 percent, respectively.

The sectoral indices also faced mayhem, ending in red with losses in the Auto, metal, IT, and banking sectors of up to 4.85 percent.