US, European markets crash; Indian markets staring at a downturn?

The Indian market is staring at a significant downturn today. The bloodbath that flowed across the US and European markets on Tuesday has now spread to Asia this morning. The dollar has strengthened, and crude oil prices have fallen. The rupee is also showing weakness, and cryptocurrencies have declined.

Two surveys indicating a decline in US factory output paved the way for this crash. Similar to the beginning of last month, recession fears have once again gripped the markets. Investors will now turn their attention to this week’s upcoming job reports.

For investors, a slight correction at record highs can be seen as healthy. However, corrections in stocks bought for short-term gains could lead to significant losses. Whether the markets will offer an opportunity to buy quality stocks at lower prices can only be known after observing future movements.

In the derivatives market, the Gift Nifty closed at 25,242 on Tuesday night, falling to 25,155 this morning. This indicates that the Indian market will start trading today with a significant drop.

US, European, Asian markets

European markets plunged on Tuesday, with major indices closing down by 1%.

Yesterday saw a major crash in the US markets, reminiscent of the bloodbath on August 5th. Nvidia, which manufactures AI chips, fell by around 10%. All chip manufacturers faced declines. Yesterday marked the worst day for the S&P 500 index since September 2022.

As two factory output indices showed weakness, the broader market also tumbled, rekindling recession fears. There is a growing belief that the US Fed will cut interest rates by 0.50% (50 basis points) on September 18. In early August, similar recession fears caused the market to drop, but later job and GDP data reversed the trend. This week, all eyes are on the upcoming job data.

The Dow Jones index fell by 626.15 points (1.51%) yesterday, closing at 40,936.93. The S&P 500 dropped by 119.47 points (2.12%) to end at 5528.93. The Nasdaq index declined by 577.33 points (3.26%), closing at 17,136.30.

US futures are showing a significant drop this morning. The Dow is down by 0.24%, the S&P by 0.46%, and the Nasdaq by 0.73%.

The yield on 10-year US Treasury bonds has risen to 3.825%.

Asian markets are experiencing a major sell-off today. Japan's Nikkei is down by 4%. Australia, Korea, and Taiwan are down by 2%, 2.5%, and 5%, respectively. Chinese markets have also declined.

The Indian scenario

The Indian market was volatile from the start on Tuesday. Major indices fluctuated, mostly in the negative zone. Finally, the Nifty closed with a marginal gain, while the Sensex ended with a marginal loss. On the NSE, 1420 stocks advanced, while 1320 declined. On the BSE, 1956 stocks rose, while 1995 fell.

Main indices saw a record-setting correction for the sixth consecutive day. The Nifty ended at a record high for the 14th consecutive day, marking the longest upward streak in its history. After a ten-day upward streak, the Sensex closed in the red yesterday.

On Tuesday, the Sensex fell by 4.40 points (0.01%) to close at 82,555.40. The Nifty rose by 1.15 points (0.0%) to end at 25,279.85. The Bank Nifty climbed by 0.49% (249.55 points) to close at 51,689.10.

The Midcap index rose by 0.25% to end at 59,297.85, while the Smallcap index climbed by 0.43% to close at 19,326.70.

The Metal, IT, Media, Auto, FMCG, Realty, and Oil & Gas sectors were in the red yesterday. The Banking, Financial Services, and Consumer Durables sectors gained.

Foreign investors bought ₹1029.25 crore worth of shares in the cash market on Tuesday. Domestic funds and institutions bought shares worth ₹1896.21 crore.

The market closed in an uncertain state. It is estimated that the Nifty must close above 25,300 to move into the 25,500-25,700 range. If it falls below 25,200, the next support is at 25,000.

The Nifty index has support at 25,245 and 25,225 today, with resistance expected at 25,310 and 25,335.

₹1.45 lakh crore defence acquisition

Defence stocks surged significantly yesterday amid expectations that the Cabinet's Defence Acquisition Council (DAC) would make major decisions. Most defence stocks had dropped by nearly 30% last month.

The DAC, which met yesterday evening, approved ten capital acquisition projects worth ₹1.45 lakh crore. Indigenous Future-Ready Combat Vehicles (FRCV) will be built to replace Russian-made tanks. Purchases will also include Air Defence Fire Control Radars, Dornier 228 helicopters, and Offshore Patrol Vessels.

Gold falls, crude oil drops, rupee weakens

Gold prices have declined again. On Tuesday, it closed at $2493.80 per ounce and this morning it stands at $2492. December holiday prices have dropped to $2524.80 per ounce.

In Kerala, the price of gold remained unchanged yesterday at ₹53,360 per sovereign.

Silver prices have fallen to $28.00 per ounce.

The Dollar Index edged up to close at 101.83 yesterday but has dropped to 101.69 this morning.

The rupee weakened on Tuesday as the dollar strengthened, closing at a record ₹83.97, up by five paise.

Crude oil has dropped again due to the easing of the Libyan crisis and recession fears. Brent Crude fell by 5%, closing at $73.75. This morning, it dropped further to $73.32. WTI Crude is at $69.90, and UAE’s Murban Crude is at $73.25.

Cryptocurrencies have declined again. Bitcoin is down 6%, hovering near $56,500. Ether has dropped by 10% to $2370.

Industrial metals have declined further. Copper is down 2.22%, reaching $8856.00 per tonne. Aluminium fell by 0.67% to $2407.50 per tonne. Nickel dropped by 0.62%, Zinc by 1.01%, and Tin by 1.36%.

Market indicators (September 3, Tuesday)

Sensex 30: 82,555.44 +0.01%

Nifty 50: 25,279.85 +0.00%

Bank Nifty: 51,689.10 +0.49%

Mid-Cap 100: 59,297.85 +0.25%

Small-Cap 100: 19,326.70 +0.43%

Dow Jones 30: 40,936.93 -1.51%

S&P 500: 5528.93 -2.12%

Nasdaq: 17,136.30 -3.26%

Dollar ($): ₹83.97 +₹0.05

Dollar Index: 101.83 +0.18

Gold (Ounce): $2493.80 -$06.30

Gold (Sovereign): ₹53,360 ₹00

Crude (Brent) Oil: $73.75 -$03.77