Market crash: Why Sensex fell 2,686 pts intraday, Nifty breached 24k today Why today’s Nifty and Sensex drops:Rising indications of an Iran-Israeli conflict in the Middle East and shaky US jobs statistics caused global stock markets to melt down early on Monday, mirroring the collapse of Indian stock markets.
In intraday trades, the benchmark BSE Sensex fell 2,686 points, or 3.3%, to an intraday low of 78,296. Conversely, the NSE Nifty50 fell below the 24,000 mark, reaching a low of 23,894. The index dropped by 3.3%, or 824 points.
The Nifty50 fell 662 points, or 2.68 percent, to end at 24,055, while the Sensex fell as far as 2,223 points, or 2.74 percent, at close to 78,768.42.
In the broader markets, the Nifty MidCap 100 and SmallCap100 indices declined 4.2 per cent and 4.9 per cent, respectively, in the intraday trade. They ended up to 4.5 per cent lower.
“The expectations of a soft landing for the US economy is under threat with the fall in US job creation in July and the sharp rise in US unemployment rate to 4.3 per cent. Geopolitical tensions in the Middle East also are a contributing factor. Another significant factor is the unwinding of the Yen carry trade which is bleeding the Japanese market. The crash in Nikkei by more than 7 per cent this morning is an indicator of the crisis in the Japanese market,” said V K Vijayakumar, chief investment strategist, Geojit Financial Services.
“The buy on dips strategy, which has worked well in this bull run, is likely to be threatened now. Investors need not rush to buy in this correction. Wait for the market to stabilise,” he added.
Last Friday, on August 2, Sensex plunged 885.6 points or 1.08 per cent to end at 80,982, while Nifty50 gave up the 25,000 levels to settle at 24,717, down 293 points or 1.17 per cent.
Here are top reasons why Indian stock markets, Sensex, Nifty, fell on Monday, August 5:
Nikkei 225 and Topix dropped as much as 12 per cent today, clocking its biggest two-day drop since 1987. With this, both the Nikkei and Topix are approaching bear market territory, having fallen almost 20 per cent from their all-time highs hit on July 11.
Among others, South Korea’s Kospi shd 4.7 per cent, Australia’s ASX200 fell 3 per cent, and Hong Kong’s Hang Seng edged 1 per cent lower.
Dow Jones, Nasdaq Futures sink:
US stock futures tumbled Monday amid global concerns of a recession in the US. Dow Jones Industrial Average futures dropped 705 points or 1.7 per cent. S&P 500 futures shed 145 points (2.7 per cent), and Nasdaq-100 futures lost 750 points (4 per cent).
On Friday, the Nasdaq posted a third straight week of losses, bringing the tech-heavy index down . more than 10 per cent from a record set last month.
The S&P 500 also posted a third straight losing week, dropping 2 per cent for the week, while Dow Jones Industrial Average snapped a four-week win streak, falling 2 per cent.
US Jobless claims:
According to the most current weekly data on jobless claims, the number of US citizens applying for benefits surged to a record high of eleven months for the week ending July 27, indicating a potential softening of the labor market.
A seasonally adjusted 249,000 first claims for state unemployment benefits was the highest level since August of last year, up 14,000 from the previous week. Reuters polled economists, who predicted 236,000 claims for the most recent week.
This has heightened concerns that the economy is on the verge of a recession and that the US Federal Reserve (US Fed) erred last week when it left interest rates unchanged.
Goldman Sachs raises recession probability in the US:
Goldman Sachs Group Inc. economists have increased the probability of a US recession in the next year to 25 per cent from 15 per cent. They, however, said there are several reasons not to fear a slump even after unemployment jumped.
“The economy continues to look fine overall, and there are no major financial imbalances. The Federal Reserve has a lot of room to cut interest rates and can do so quickly if needed,” they said.
Iran-Israel war:
Israeli Prime Minister Benjamin Netanyahu said that “Israel is in a multifront war against Iran’s axis of evil” at the opening of a cabinet meeting on Sunday, amid escalating tensions between Iran and Israel.
Following the Israeli assassination of Hezbollah’s military chief in Beirut, Iran and the so-called “axis of resistance” vowed to exact revenge for the death of Hamas leader Ismail Haniyeh in Tehran last week.
Technical levels:
The Nifty 50 index failed to break out last Friday because there was no bullish follow-through buying demand. In the near future, the Nifty50 index is anticipated to find support between 24,400 and 24,300.
The Nifty broke below the 24,075 budget day low today, breaking the upward trend.”Weakness is shown by the clear closing below the 20-day moving average (24,575). We think the Nifty is currently reversing the gain that it saw from 21,280 to 25,078. A pivotal Fibonacci retracement level is situated at 23,628 while the 20-week moving average is at 23,280. The immediate upward barrier is set between 24,300 and 24,350, according to Jatin Gedia, a technical analysis analyst at Sharekhan by BNP Paribas.
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