Sensex crashes 800 points mirroring US Markets

The benchmark Indian indices reacted sharply to the sell-off in the US markets opening gap-down on Thursday morning. BSE Sensex opened at 34,063 level down by 2 per cent, while Nifty50 fell by over 2.7 per cent and opened at 10,192 level. 

We can ascribe the plunge to the fall in the US markets as investors there got spooked by the rising interest rates and inflation. The Dow Jones index dropped more than 800 points, the worst sell-off recorded since February and closed 3 per cent down at 25,598.74. The Nasdaq Composite level closed below 4 per cent at 7,422.05 level. 

When the government hikes the interest rates it no doubt has a huge effect on the economy. Higher rates tend to moderate economic growth as it makes borrowings expensive for the industries as well as consumers. Traders rushed out of stocks that have been driving the economy, namely the big techs. Netflix was down more than 8 per cent, Amazon was off 6 per cent, while Apple and Google were both down over 4.5 per cent. Utilities and consumer staples were the only positive sectors in the US market. 
Stock markets across Asia dropped sharply on Thursday morning. Japan’s Nikkei and Topix, the Hang Seng index, Shanghai Composite and the Shenzhen Component all lost more than 3 per cent. Australia’s benchmark ASX 200 dropped almost 2 per cent immediately after opening. The Taiwan Benchmark Index plummeted almost 5 per cent to a 16-month low. 

At 11:53 hours, the S&P BSE Sensex was at 34,014.51 level, down by 2.16 per cent. The BSE Mid-cap index was at 14,075, down 1.58 per cent and the BSE Small-cap index was at 13,799.87, down by 1.41 per cent. All the sectors were in red, except for the oil and gas sector which was marginally up by 0.12 per cent.