Indian stock markets crashed nearly 3 per cent on Monday, wiping out over Rs 15 lakh crore of investor wealth. This was triggered by a sharp plunge in global indices on fears of recession in the United States, a bloodbath in Japanese markets, and increasing geopolitical uncertainty in the Middle East.
The rupee also slumped 37 paise to settle at an all-time low of 84.09 against the US dollar on Monday.
The Sensex plunged 2,222.55 points or 2.74% to settle at over a month's low of 78,759.40. During the day, it fell 3.31%. The market capitalisation of BSE-listed firms dropped by Rs 15.3 lakh crore. The NSE Nifty 50 index slid 2.68% to 24,055.6.
This was the steepest fall in benchmark indices BSE Sensex and NSE Nifty in two months.
"The global markets were jolted into a cautious mode by recessionary fears in the US following disappointing job statistics and an unwinding of carry trade following the rapid rise of the yen. The effects were felt by the domestic market as well and are expected to impact in the near-term,” said Vinod Nair, Head of Research, Geojit Financial Services.
“Nifty plunged heavily on the back of weak global cues especially from Asian markets coupled with geo-political tensions in the middle east weakening the bias and sentiment significantly,” said Vaishali Parekh, Vice President, Technical Research at Prabhudas Lilladher.
In Asian markets, Seoul, Tokyo, Shanghai and Hong Kong settled sharply lower. Japan's benchmark stock index - Nikkei - plunged 12.4% on Monday. This was triggered by the yen carry trade and the Bank of Japan raising interest rates last week. European stocks fell to near six-month lows. As of late Monday evening India time, Nasdaq and the NYSE Composite indices were both down more than 2%.
“The recent hike in Japanese interest rates and appreciation in the yen has led to a double whammy for yen carry traders who have to pay back in yen and suffer losses on their investments too,” said Apurva Sheth, Head of market perspectives and research, SAMCO Securities.
From the Sensex pack, Tata Motors slumped over 7%. Adani Ports, Tata Steel, State Bank of India, Power Grid, Maruti Suzuki and JSW Steel were the other big laggards. However, Hindustan Unilever and Nestle ended in positive territory.
In the broader market, the BSE smallcap gauge dropped 4.21%, and midcap index plummeted 3.60%.
Looking ahead, market analysts were in broad agreement that the weakness in Indian equities, after months of a sustained bull-run, will continue for a while.
“(Nifty) Sentiment is likely to remain weak in the short term and may weaken further below 23,900 levels,” said Rupak De, Senior Technical Analyst, LKP Securities.