Dear
Trader…
During the day, the Sensex declined by 722 points but
recovered 519 points, closing 203 points lower at 82,352. The broader NSE Nifty
Future dropped 106 points or 0.42% to end at 25,247.
Among the Sensex constituents, IT and financial stocks
experienced the steepest declines, with ICICI Bank, Infosys, L&T, Axis
Bank, SBI, M&M, and TCS being the main contributors to the index’s fall.
Information technology companies, which derive a significant
portion of their revenues from the US, saw their stocks decline by up to 3%.
The Nifty PSU Bank index also dropped 1.7%, making it the top sectoral loser,
with Bank of Baroda, Canara Bank, and Indian Bank leading the decline.
Here are the top factors behind today’s bloodbath:-
1)
Worries over U.S. slowdown – Concerns
over a potential U.S. economic slowdown have led to a decline in the Indian
stock market. Data from the Institute for Supply Management (ISM) revealed that
U.S. manufacturing remained subdued in August, signaling ongoing weakness in
the sector.
The ISM said its manufacturing PMI rose to 47.2
last month from 46.8 in July, which was the lowest reading since November. A
PMI reading below 50 indicates contraction in the manufacturing sector, which
accounts for 10.3% of the economy.
2)
Sharp fall in global markets – A sharp decline in global markets, particularly in technology stocks,
has further exacerbated the fall in Indian equities. Asian markets were hit
hard, with Tokyo and Taipei benchmarks falling over 3%. The slump was driven by
concerns over global growth, exacerbated by weak U.S. manufacturing data and a
significant drop in AI-related stocks like Nvidia, which tumbled after investor
enthusiasm waned. The The S&P 500, Nasdaq Composite, and Dow Jones all recorded
their biggest daily percentage declines since early August.
3)
Upcoming U.S. economic data – The Indian equity market also reflecting the impact of a sharp decline
in U.S. markets yesterday. Traders in the U.S. were cautious ahead of key labor
market reports due this week, including Friday’s non-farm payrolls data for
August. This sentiment has carried over to Indian markets, resulting in a
subdued start.
Investors are also focused on the Federal Reserve’s upcoming
meeting on September 17-18, particularly after Chair Jerome Powell expressed
support for easing monetary policy. The CME Group’s FedWatch Tool indicates a
63% chance of a 25-basis point interest rate cut, with a 37% likelihood of a
more significant 50 bps reduction.
4)
Sluggish chinese economy – Recent data from
China signaled a struggling economy, raising expectations for further stimulus
from Beijing. The latest reports showed Chinese factory activity contracting
for a fourth consecutive month in August, intensifying concerns that the
world’s second-largest economy may struggle to meet this year’s growth target.
Nifty futures opened at 25210 points against the previous
close of 25354 and opened at a low 25142 points. Nifty Future closed with an
average movement of 133 points and a decline of around 107 points and closed 25247
points…!!
Meanwhile,
The warning signals from weak US manufacturing
data added concerns about a potential slowdown in the US economy, which dragged
the domestic indices. Further, a sluggish Chinese outlook exacerbated the decline
in oil price to a nine-month low. Due to a lack of major domestic triggers, the
indices will take direction based on global cues.
The selloff in US markets yesterday was triggered by growth
concerns. There are indications of US manufacturing moving into contraction
thereby threatening the soft landing expectation, which has been the pillar of
support for the mother market US and consequently for other markets, too.
Technically, the
important key resistances are placed in Nifty future are at 25247 levels, which
could offer for the market on the higher side. Sustainability above this zone
would signal opens the door for a directional up move with immediate
resistances seen at 25404 – 25474 levels. Immediate support is placed at 25188 –
25008 levels.
Past Performance is not an Indicator of Future Returns. The
securities quoted are for illustration only and are not recommendatory. Investment
in securities market are subject to market risks. Read Disclaimer and related
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