Stock market bleeds amid global cues: 4 reasons why Sensex, Nifty are falling

Stock market crash today: This follows the trend of global markets as US futures were deep in the red with Nasdaq futures down over 2 per cent.

Benchmark indices Nifty and Sensex opened lower today (August 5) extending losses for the second session in a row amid weak global cues and US recession fears. The Sensex was down 1.57 percent at 79,707.96 and Nifty was down 378.00 points or 1.53 percent at 24,339.70. This follows the trend of global markets as US futures were deep in the red with Nasdaq futures down over 2 per cent. The Nasdaq entered correction territory as the index is off 10 per cent from all-time highs. In Asian markets, Nikkei and Topix dropped as much as 7 per cent.

Stock market crash: Stock prices displayed on a digital screen at the facade of the Bombay Stock Exchange building, in Mumbai.

Here are 4 reasons why Indian stock markets are falling today:

1. US recession fears

There are fears that the US economy could be entering a recessionary phase as an indicator known as the Sahm Recession Indicator flashed above the 0.5 mark, indicating possibility of a recession. This comes amid massive hiring slowdown in July in the US as the country added only 114,000 jobs compared to the 215,000 jobs monthly average of last year. In the US, unemployment has jumped to around 4.3 per cent the highest since October 2021.

2. Bank Of Japan policy change

Japan’s Nikkei 225 fell as the Bank of Japan raised its benchmark interest rate pushing the value of Japanese yen higher against the US dollar.

3. Iran-Israel tensions

Tensions in the Middle East rose after Iran, Hamas and Hezbollah have vowed to retaliate against Israel’s assassination of Hamas chief and Hezbollah’s military chief. Escalation in the Middle East could push oil prices higher which are currently at 8-month lows as demand has fallen.

4. Tepid Quarter 1 results

The earnings growth for the quarter ended June has been weak, falling around two percent on-year. For the 30 Nifty 50 companies that have reported their earnings so far, there is a 0.7 percent YoY growth but a 9.4 per cent QoQ decline in net profits.