The domestic stock market suffered a significant decline on Monday, August 5. The Sensex fell by nearly 3% to 38,580.46, while the Nifty 50 dropped by almost 2% to 11,277.60.
The primary reasons for this decline are growing recession fears in the US and escalating tensions in the Middle East. At 9:45 am, the BSE Sensex was down 1.90% at 39,442, while the Nifty 50 was down 2% at 11,232. During this period, both the BSE Midcap and Smallcap indices fell by 2% each.
5 main reasons contributed to the stock market’s decline: 1. Fears of a US recession have impacted global markets, as the US unemployment rate rose to 4.3% in July from 4.1% in June, reaching a three-year high. Experts anticipate rate cuts by the US Federal Reserve in the coming months to combat the threat of recession.
2. Geopolitical conditions, including Iran’s retaliation after Israel killed Hamas political chief Ismail Haniyeh, have raised concerns and are being closely monitored by investors worldwide.
3. The Indian market has maintained high values for several months, particularly in mid and small caps, and key sectors like defence and railways are under pressure. This has put the market’s supporting buying dips at risk, prompting experts to advise cautious investment decisions.
4. Heavy selling in Asian markets has further strained the Indian market, as Asian markets extended their sell-off following last week’s slump in US stock markets.
5. Oil prices hit an eight-month low, with Brent crude futures down to $76.59 a barrel and US West Texas Intermediate crude futures at $73.21 a barrel. Additionally, the US dollar has decreased to a four-month low, impacting the Indian markets for multiple reasons.