US Markets Crash Overnight Will Have an Impact on Nifty Today

  • 8 months ago
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By Puneet Sikka — Overnight, the US markets, which include the major indices , , and all suffered from a steep decline. Nasdaq plunged by more than 5% after investors decided to book profits in the high-flying tech stocks. The talks of a big correction were already making rounds after both Nasdaq and S&P 500 had made consistent gains of more than 40% since the March lows. This profit-taking activity was inevitable, but the extent of the fall overnight surprised many. The absence of another round of fiscal stimulus from the US government also played on investors’ sentiments.

is all set to open in red today. SGX are showing a decline of more than 1%, while is showing a flat reading as of 7 am IST today. could be even more volatile after the Supreme Court heard the case of waiving interest rates for bank loans under moratorium.

Correction in Nifty is also inevitable after the stock markets rally and the economic reality started to show divergence. Asia’s third-largest economy’s data shows that the recovery is still far away. India’s services sector contracted for the sixth consecutive month, GDP for the second quarter plunged by 24%, and the unemployment rate again increased to 8.4% in August (source: Centre for Monitoring Indian Economy). There is a growing chance that India could enter the period of stagflation — higher inflation, stagnant demand, and high unemployment.

The most active stocks yesterday were Vodafone (LON:) Idea Ltd (NS:), Reliance Industries Ltd (NS:), and Tata Motors (NS:). Vodafone stock shot up by 30% yesterday on the news that Verizon (NYSE:) and Amazon (NASDAQ:) could invest about $4 billion for a stake in the company. Tata Motors, on the other hand, reported better than expected August sales.

The overnight loss in equities meant that the lost some value, which also meant that prices are slightly up as of now. The Rupee (), which has been appreciating over the last few days, could appreciate further if the dollar continues its decline.

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