All sector indexes were trading in the red, headed by auto, FMCG, IT, metals, and real estate. The BSE midcap and smallcap indexes were down over half a percent each in early trade.
The Indian stock market fell further on December 20 on fears of a US recession and an increase of COVID-19 cases in China.
The Sensex is down 576.14 points, or 0.93%, at 61230.05 at 10:51 hours IST, and the Nifty is down 179.80 points, or 0.98%, at 18240.70.
All sectors indexes were trading in the red, headed by auto, Fast-moving consumer goods FMCG, IT, metals, and real estate. The BSE midcap and smallcap indexes were both down more than half a percent.
Prashanth Tapse, Research Analyst, Senior VP (Research) at Mehta Equities believes that the market will continue to be turbulent in intra-day transactions and would likely drift down in early Tuesday sessions due to SGX Nifty weakness and overnight decrease in the Sensex.
“Investors continue to fret over the Federal Reserve’s hawkish stance that could tip the world’s largest economy into recession next year. However, the major catalyst for investors would be the recent RBI monetary policy meeting’s minutes, which are expected to be wired on Wednesday. It would provide some indication to traders on what holds for the markets in the medium term with regard to interest rates, inflation and the economy. Also, the US GDP numbers, which will trickle in on Thursday, would be keenly followed, providing some indication of where the world’s largest economy is headed,” he said.
Here are the elements causing markets to fall:
Weak global indices:
Wall Street finished down on Monday for a fourth straight day with Nasdaq leading drops as investors stayed away from riskier bets, fearful the Federal Reserve’s tightening program may push the US economy into a recession. The Dow Jones Industrial Average was down 162.92 points, or 0.49 percent, to 32,757.54, the S&P 500 was down 34.7 points, or 0.90 percent, to 3,817.66, and the Nasdaq Composite was down 159.38 points, or 1.49 percent, to 10,546.03.
Among Asian stocks, the Nikkei fell more than 2%, while the Hang Seng and Taiwan both fell more than 1%. At 09:43 AM, the SGX Nifty was down 148 points, or 0.8 percent, and was trading at 18,339 level.
US recession concerns frighten investors:
Investors are concerned that the Federal Reserve’s tightening of monetary policy would cause the US economy to enter a recession. When the Fed hiked interest rates, Chairman Jerome Powell struck a more aggressive tone than expected. Powell pledged additional hikes even as dismal data indicated symptoms of a slowing economy.
The Bank of Japan will allow longer-term interest rates to climb further.
The Bank of Japan (BOJ) has chosen to allow long-term interest rates to increase further, a move, analysts said, might mark a start towards modifying Japan’s long-held yield curve regulation. In its final meeting of the year, the BOJ said its yield curve control (YCC) goals, set at -0.1 percent for short-term interest rates and around zero for the 10-year bond yield, will stay. However, instead of the previous 25 basis points, it has opted to let the 10-year bond yield go up and down 50 basis points from the 0 percent objective.
