Sensex and Nifty collapsed on fears of US recession and growing geopolitical tensions

Summary: For the first time since late February 2021, the MSCI's broadest index of Asia-Pacific equities fell 3.8%.

The Sensex fell as much as 2,401 points on Monday, and the Nifty 50 index fell 490 points to an intraday low of 24,228. Other global markets mirrored these acute losses due to growing worries about a possible US recession and the escalating geopolitical tensions between Israel and Iran.

The Nifty 50 index was down 478 points, or 1.94 percent, to 24,239 as of 9:37 am, while the Sensex fell 1,563 points, or 1.91 percent, to 79,416.

"The whole economy is suffering as bears enter with a slew of negative news. The initial catalyst was the concern of a reverse Yen carry trade following Japan's interest rate hike. China and Europe are already experiencing slowdowns, and rising geopolitical tensions are putting more pressure on the markets," said Santosh Meena, Head of Research at Swastika Investmart.

"We are seeing signs of the first substantial downturn in global markets following a long bull run. Investors and traders should use caution and avoid rushing in right away, as better entry points may emerge. The outlook for our market remains quite bright, but with the possibility of a large downturn, investors should consider taking profits where value concerns arise. Technically, Nifty has support at the budget day low of 24075, with the next level at the 50-day moving average of about 23900. The major support level is 23300. On the upside, 24800-25000 will be a critical resistance level," Meena said.

Amid concerns that the US Federal Reserve could find it difficult to accomplish a soft landing for the economy, investors fled to safer assets like bonds, causing the global sell-off to spread to Asian emerging shares. Weak US economic data sparked concern, prompting debate about the necessity for more aggressive interest rate cuts to avoid a recession.

With a 3.8% decline, the MSCI's broadest index of Asia-Pacific stocks had its worst performance since late February 2021. A measure of stocks in Asian emerging markets also hit a three-month low. 

While South Korean equities plunged more than 5%, the biggest decline since the COVID-19 outbreak began in March 2020, Taiwan's benchmark index fell 7.9%, the greatest decline since May 2021.

Southeast Asian equities plummeted roughly 2% in Indonesia and the Philippines, while Singapore's benchmark index dropped 3.6%, the most in over two years.

At home, the rupee fell to an all-time low of 83.90 against the dollar, mirroring the losses in the equity markets. With a 5% plunge, the Nifty Realty index led the losses. The Nifty PSU Bank, IT, Auto, Bank, Financial Services, Metal, and Oil & Gas indices all saw declines of 1.5% to 4%.

There was selling pressure on mid- and small-cap shares as well; the Nifty Midcap 100 index was down 2.64 percent, while the Nifty Smallcap 100 index fell 3.1%. 

As the stock fell 5% to Rs 1,042, Tata Motors suffered the biggest loss on the Nifty. The following companies saw declines: Hindalco, Shriram Finance, Tata Steel, ONGC, Coal India, Adani Ports, State Bank of India, Eicher Motors, Mahindra & Mahindra, and JSW Steel. The average decline was between 3 and 4.7%.

In contrast, Hindustan Unilever, Britannia, and Sun Pharma were a few of the noteworthy winners.

With 2,887 equities falling and only 383 gaining on the BSE, the overall market breadth was extremely negative.

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