While most of us in India had called it a day after a 540-points fall on the BSE, the US markets opened to new gloom and doom.
The Dow fell 913 points or 3.2% - the worst day since 3rd Sept and the S&P fell 2.8%, Nasdaq 2.7%. It was red all around.
And because we are now closely linked with the markets abroad, especially US, it impacts our markets – US markets fall, we get hurt. So, while we might be feeling a bit better, feeling queasy about the data yet choosing to believe that the Covid has taken a short respite in India, its not so in other parts of the world – that’s the prime reason why the global markets got antsy and fell.
A quick run-through the reasons why the global markets fell:
- Surging corona cases in USA and Europe
- Rising worries about the economic outlook
- Fears of lockdowns happening all over again – abroad as of now, not in India.
- Failure of the White House to agree on a much-anticipated fiscal stimulus deal.
- Its evident now – we cannot move to a new cycle until this health-care issue is resolved.
- Oil prices slip further – apart from muted economic outlook, increased supply from Libya on account of cease-fire could lead to further supply glut.
What does this mean for India?
- We usually move in tandem with US markets– that’s the pattern.
- On the other hand, the earnings season has been good till now and we are seeing green shoots – too early to say if they will last or wither away but bottomline – better recovery than expected.
- Reliance Inds has the highest weightage on the Nifty as well as the BSE Sensex. So, when RIL falls, it means markets fall. It closed 4% lower yesterday and why? Check out the reason in our new column – Market Gossip.
- The technical reason – the F&O expiry for Oct is scheduled for 29th Oct and till then, we will see this volatility.