Sensex, Nifty slump in early trade tracking weak global markets

Mid-day

India's key equity indices, the Sensex and Nifty, fell sharply in early trade on Wednesday after a record-breaking rise fuelled by negative trends in global markets. The BSE Sensex slid 721.75 points to 81,833.69, while the NSE Nifty dropped 196.05 points to 25,083.80.

Major decliners among the 30 Sensex corporations included JSW Steel, Infosys, Larsen & Toubro, State Bank of India, Tata Steel, Mahindra & Mahindra, Bharti Airtel, and Axis Bank. However, Asian Paints, Bajaj Finserv, Bajaj Finance, and Hindustan Unilever all posted rises.

Key indices in Seoul, Tokyo, Shanghai, and Hong Kong all fell sharply. This comes as US markets fell sharply on Tuesday, fuelled by concerns about growth and signs that US manufacturing may be contracting. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stated that the possibility of a soft landing in the US economy, which has previously underpinned global markets, now appeared to be jeopardised.

"The selloff in US markets yesterday (Tuesday) 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 the US and consequently for other markets, too," said VK Vijayakumar.

On Tuesday, the BSE Sensex fell 4.40 points to close at 82,555.44, bringing an end to a 10-day surge. Meanwhile, the Nifty gained 1.15 points to close at 25,279.85, its highest level ever. Over the last ten days, the BSE Sensex has risen by 2,135 points, or 2.61 per cent, while the Nifty has gained nearly 1,141 points, or 4.59 per cent, over 14 consecutive days of gains.

Foreign Institutional Investors (FIIs) bought equities worth Rs 1,029.25 crore on Tuesday, according to exchange data.

In currency markets, the Indian rupee rose 2 paise, finishing at 83.96 against the US dollar in early trade Wednesday. This was aided by a weaker dollar against key foreign currencies and a decline in crude oil prices. The dollar index, which measures the greenback against six major currencies, was down 0.14 per cent to 101.67, while Brent crude oil, the worldwide benchmark, fell 0.62 per cent to USD 73.29 a barrel in futures trading.

On the interbank foreign exchange market, the rupee began at 83.96, up 2 paise from its previous close of 83.98 versus the US dollar on Tuesday. Amit Pabari, Managing Director at CR Forex Advisors, stated that a dramatic drop in oil prices, combined with the impact of US job data, contributed to the market's volatility.