Stock Market Crash Today: Nifty50 Below 24,550, BSE Sensex Drops Over 1,000 Points

Indian equity benchmark indices, the Nifty50 and BSE Sensex, experienced a sharp decline on Thursday, with the Nifty50 falling below 24,550 and the Sensex dropping over 1,000 points. At 1:46 PM, the Nifty50 was trading at 24,524.75, down 289 points or 1.16%, while the BSE Sensex stood at 80,649.22, down 947 points or 1.16%. The market downturn was driven by a combination of global economic concerns and domestic factors.

Key Sectors and Major Players

• Reliance Industries shares fell the most, dropping 1.5% to Rs 1,406 on the BSE.
• The Nifty Auto, FMCG, IT, Pharma, Consumer Durables, and Oil & Gas sectors all declined between 1% and 1.5%.
• The Nifty Bank and Financials indices dropped by up to 0.7%, while the Nifty Midcap and Smallcap indices recorded modest declines of 0.5% and 0.2%, respectively.
• The total market capitalisation of BSE-listed companies fell by Rs 2.6 lakh crore, settling at Rs 438.56 lakh crore.

Top Reasons for the Market Fall

1. Elevated U.S. Treasury Yields

Long-term U.S. Treasury yields reached peak levels not seen in 18 months, with the 30-year bond yield remaining above 5% during Asian trading hours. These elevated yields are pushing investors to seek safer assets, particularly impacting emerging markets like India.

2. U.S. Fiscal Concerns and Moody’s Downgrade

Global markets have become cautious after Moody’s reduced the United States’ credit rating, signaling growing concerns about the nation’s debt obligations. Analysts warn that proposed taxation legislation, set for a vote this week, could increase U.S. debt by $3.8 trillion, adding to the existing $36 trillion. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that the high fiscal deficit of the U.S. is seen as unsustainable by the market.

3. Weak U.S. Bond Performance

A lackluster response to Wednesday’s $16 billion auction of 20-year bonds highlighted investors’ hesitancy towards U.S. assets, leading to higher yields. Vijayakumar pointed out that the weak U.S. 20-year bond auction and the spike in yields of 5-year, 10-year, and 30-year bonds indicate declining confidence in U.S. bonds. This has negatively impacted Asian markets, with MSCI’s Asia-Pacific index outside Japan falling 0.5%, while Japan’s Nikkei dropped 0.7% due to yen appreciation. Chinese indices fell 0.2%, and Hong Kong’s Hang Seng index declined 0.8%.

4. Market Adjustment After Strong Gains

Sameet Chavan, Head of Research at Angel One, observed that the recent substantial gains have led to overbought market conditions, with values exceeding short-term moving averages. Despite an overall positive trend, a period of stabilization is likely. A sustained move below the recent matching lows near 24,700 could trigger further profit booking, potentially dragging prices towards 24,600 and the 20-day EMA near 24,500.

Market Outlook and Expert Views

Analysts suggest that the market may experience a period of consolidation as investors adjust to the new economic landscape. The current downturn highlights the interconnectedness of global markets and the sensitivity of emerging economies to macroeconomic factors. Investors are advised to monitor developments in U.S. fiscal policy and global economic indicators for potential shifts in market sentiment.

It is important to note that the views and recommendations provided by experts are their own and do not represent the views of any specific media outlet.