BENGALURU: Indian shares tumbled more than 2.5% on Monday, in their steepest drop in two months amid a global sell-off on fears of a U.S. recession.
The NSE Nifty 50 index slid 2.68% to 24,055.6 and the S&P BSE Sensex dropped 2.74% to 78,759.4.
Investors piled out of stocks globally after a bleak U.S. jobs report on Friday – the unemployment rate jumped to near a three-year high in July amid a significant slowdown in hiring – kindled fears that the Federal Reserve’s delay in rate cuts may have tipped the United States into a recession.
Asian stocks tanked 4.2%, Japan’s Nikkei plunged 12.4%, while European stocks fell to near six-month lows. U.S. stock index futures tumbled, with those tied to the Nasdaq falling nearly 4%.
“Bad news is finally bad news from the U.S.,” said Abhishek Banerjee, founder of investment advisory firm Lotusdew Wealth and Investment Advisors.
“A weak jobs report, disappointments in semi-conductor earnings have all contributed to risk-off today, hurting expectations of a soft landing for the world’s largest economy.”
Indian shares end series of gains as US growth concerns spook global markets
The Nifty 50’s momentum turned negative after 41 sessions, while volatility rose to a two-month high.
The weakness was widespread, with about 90% of all the stocks listed on the National Stock Exchange logging losses.
Among sectors, information technology companies, which earn a significant share of their revenue from the U.S., fell 3.26% in their worst session in a year.
The one bright spot was the defensive and more domestically oriented consumer staples companies, which accounted for four of the five gainers on the Nifty 50.
Marico rose about 1.5% to lead the eight gainers on the Nifty 100 after the cooking and hair oils maker posted a slightly better-than-expected quarterly profit.
The pile-out of equities likely helped push the rupee to a record low, while bond yields dropped to a two-year low.
Still, Indian stocks fell less than their regional peers, which gave some analysts confidence in their medium-term prospects.
“The Indian stock market is much more resilient than other Asian and emerging markets in the face of a U.S. downturn because the market is driven by domestic money,” said Christopher Wood, head of global equity strategy at Jefferies.