Markets have reached the conclusion that US President Donald Trump’s policies are steering America towards an economic recession. The massive sell-off in US markets yesterday is a direct result of this sentiment. Asian markets have also opened with significant declines today, following the same trend. The Indian market, too, is moving in that direction.
US market futures this morning show a notable decline. Demand for American government bonds has increased, while the dollar has weakened against multiple currencies. Concerns over a recession have pushed crude oil prices below $69 per barrel, while cryptocurrencies have also suffered sharp declines.
Later today, data on US retail inflation for February and the industrial production index for January will be released. The US retail inflation figures are expected to be published tonight.
In the derivatives market, the GIFT Nifty closed at 22,425 on Monday but fell to 22,315 this morning before making a slight recovery. This indicates that the Indian market is likely to open with significant losses today.
Global markets
European markets closed with heavy losses on Monday, with technology stocks leading the decline. Today, the market’s attention is focused on the US-Ukraine discussions taking place in Saudi Arabia.
The US market saw one of its steepest declines in recent times on Monday. The technology-heavy Nasdaq Composite index dropped by 4%, bringing it 13.5% below its recent record high. The so-called "Magnificent Seven" stocks—Apple, Nvidia, Microsoft, Alphabet, Amazon, Meta, and Tesla—which had led last year’s rally, were at the forefront of the decline. Nvidia, which is now down 29% from its record high, fell by 5.4% yesterday.
Tesla, the company owned by President Trump’s advisor Elon Musk, dropped by 15.43% yesterday, with an additional 2% decline in after-hours trading. The primary reason behind Tesla’s fall is the drop in car sales, with sales declining by 49% in China, 30% in Europe, and 26% in America.
The US retail inflation data for February, due on Wednesday, along with today’s US-Ukraine talks in Saudi Arabia, will determine market direction.
Tesla, the company owned by President Trump’s advisor Elon Musk, dropped by 15.43% yesterday, with an additional 2% decline in after-hours trading. The primary reason behind Tesla’s fall is the drop in car sales, with sales declining by 49% in China, 30% in Europe, and 26% in America.
The US retail inflation data for February, due on Wednesday, along with today’s US-Ukraine talks in Saudi Arabia, will determine market direction.
On Monday, the Dow Jones index fell by 890.01 points (2.08%) to close at 41,911.71. The S&P 500 index dropped by 155.63 points (2.69%) to 5,614.56. Meanwhile, the Nasdaq Composite index plunged by 727.90 points (4.00%) to close at 17,468.32.
US futures remain in decline this morning. The Dow is down by 0.53%, the S&P 500 by 0.93%, and the Nasdaq by 1.33%.
Asian markets have opened sharply lower today. Japan’s Nikkei is down by 2.75%, while South Korea’s Kospi has declined by 2.2%. Japan’s GDP growth for the fourth quarter has been revised down from 2.8% to 2.2%. The Hong Kong and Chinese indices have also fallen. In an effort to stimulate consumer spending, China, where retail inflation has turned negative, has announced a $41 billion stimulus package.
Hopes that Trump’s tariff threats would not significantly impact India initially led to an attempt at market recovery yesterday. However, the market later reversed course and ended in losses, with the main indices fluctuating by nearly 1%. The Nifty climbed to 22,676.75 before dropping to 22,429 and eventually breaking the 22,500 support level at the close. The Sensex rose to 74,741 but later fell to 74,022. Meanwhile, the mid-cap index fell by 1.5%, and the small-cap index by 2%.
With the exception of the FMCG index, all sectoral indices ended in losses yesterday. Realty, oil and gas, consumer durables, PSU banks, auto, metal, pharma, IT, healthcare, and private bank sectors all saw declines.
On Monday, the Nifty fell by 92.20 points (0.41%) to close at 22,460.30. The Sensex dropped by 217.41 points (0.29%) to 74,115.17. The Bank Nifty lost 280.70 points (0.58%) to close at 48,216.80. The mid-cap index declined by 1.53% (750.50 points) to 48,448.10, while the small-cap index fell by 1.97% to close at 15,198.15.
Foreign investors were net sellers in the cash market on Monday, offloading ₹485.41 crore worth of stocks. Domestic funds and financial institutions, on the other hand, made net purchases worth ₹263.51 crore.
Market breadth turned strongly bearish again, with declining stocks significantly outnumbering advancing ones. On the BSE, 1,127 stocks gained, while 2,963 stocks declined. On the NSE, 607 stocks advanced while 2,308 declined.
Market sentiment has turned bearish. The Nifty closing below 22,400 was a setback for bullish investors. If the index fails to hold within the 22,400-22,250 range today, the next support levels are expected to be between 22,000 and 21,900. Immediate support for the Nifty today is expected at 22,370 and 22,275, while resistance is anticipated at 22,615 and 22,680.
The gold market is also reacting to recession fears, with prices declining. Investors are hesitant to return to gold as a safe-haven asset at this stage. The market is now focused on potential dramatic changes, such as an early interest rate cut by the US Federal Reserve next week. Gold closed lower at $2,889.10 per ounce yesterday and has dropped further to $2,888 per ounce this morning.
In Kerala, gold prices rose by ₹80 per sovereign on Friday, reaching ₹64,400.
Silver prices have also dropped, with the metal closing at $32.06 per ounce.
The dollar index, which had dipped slightly, saw a marginal recovery. It rose from 103.84 to 103.90 at yesterday’s close and is at 103.79 this morning.
The rupee saw significant depreciation yesterday, as the dollar gained by 46 paise, closing at ₹87.33. The Chinese yuan fell from 7.23 to 7.26 per US dollar. The euro, pound, and yen have all shown strength against the dollar in recent days. Markets expect Trump’s policies to further weaken the US dollar.
Recession fears have driven increased demand for US bonds, pushing their prices higher and reducing yields. The yield on the 10-year Treasury bond has fallen to 4.186%, down from 4.31% two days ago. Markets anticipate that interest rates will decline further if a recession materialises.
Recession concerns have also led to a decline in crude oil prices. Brent crude fell from over $70 per barrel, closing at $69.28, down 1%. This morning, Brent crude is trading at $68.84 per barrel. WTI crude is at $65.51, while UAE’s Murban crude has dropped to $69.65 per barrel.
Cryptocurrency markets have also suffered further declines. Investors are now wary of entering the crypto space amid recession fears. Bitcoin has fallen to $77,396, although it briefly climbed to $79,000 this morning. Ether has dropped by 8% to around $1,880. The trend suggests further declines are likely.
Industrial metals have shown mixed movements. Copper declined by 1.21% to $9,546.65 per tonne. Aluminium also fell by 0.23% to $2,694.30. However, tin gained 0.77%, nickel rose by 2.32%, and lead climbed by 1.55%. Zinc dropped by 0.82%.
Market indicators
Sensex 30 74,115.17 -0.29%
Nifty50 22,460.30 -0.41%
Bank Nifty 48,216.80 -0.58%
Midcap100 48,448.10 -1.53%
Small Cap 100 15,198.15 -1.97%
Dow Jones 41,911.71 -2.08%
S&P 5614.56 -2.69%
Nasdaq 17,468.32 -4.00%
DOLLAR ($) ₹87.33 +₹0.46
Dollar index 103.90 +0.07
Gold (ounce) $2889.10 -$22.40
Gold (sovereign) ₹64,400 +₹80
Crude (Brent) oil $69.28 -$00.84
