What will happen to the share market? This question is increasingly arising in the minds of retail investors. Because for the second consecutive day, a huge decline is being seen in the Indian stock market. Midcap and smallcap stocks are getting beaten the most. Shares of government companies have fallen the most.
Actually, there are global reasons behind this decline, India’s economy is strong and the market knows this. But if we look at other countries, there is an outcry there, the effect of which is now visible on the Indian markets.
Outcry in the American market
Let us tell you that the biggest decline is going on in the American stock market, after that there has been an earthquake in the Japanese stock market. Apart from this, there is chaos in Taiwan’s stock market also. Taiwan’s benchmark index Taipei has seen its biggest decline in 57 years. Taipei has fallen 8.4 percent. This is the biggest fall in one day since 1967.
This step of Japan has a big impact
Japan’s stock market Nikkei has fallen by more than 12 percent, this is the biggest fall in a day in the last 37 years. After 1987, today was the worst day for the market here. In fact, the Bank of Japan, the central bank of Japan, has increased the policy interest rates by 25 basis points (0.25%) on Wednesday (31 July 2024) after almost 14 years.
After this, there was a rise in the Japanese currency yen against the dollar. Due to its low interest rates, the Japanese currency Yen was used for Forex strategies like ‘Carry Trade’. This means that yen was borrowed at low interest rates and invested in assets with high yields. But now, after the increase in rates, the strategy of forex traders has suffered a setback. Due to this also, there is turmoil in the global markets.
Fear of further decline?
America, the world’s largest and strongest economy, is also in bad shape. At present, US futures are indicating that the market decline is not going to stop for now. Dow Jones futures are showing a decline of 400 points. While Nasdaq futures are looking down by 700 points. The weak manufacturing (PMI) data released in America has created a stir. Here the manufacturing index for July has been 46.8%, which is worrying. Manufacturing index less than 50 percent is not considered a good sign.
Apart from this, pressure on the stock market increased due to the unemployment rate in America being higher than expected. US dollar rates and Treasury yields also increased. In the American stock market, huge decline is being seen in the stocks of leading technology companies like Nvidia, Intel, Apple, Broadcom Inc.
Lower circuit in South Korea market
South Korea’s stock market has entered a lower circuit, which is the worst for the South Korean market since 2001. The decline in demand in China is also adding strength to the recession. Especially the demand for crude oil has decreased in China. Due to which a decline is being seen in the prices of crude oil. At the same time, the markets of Italy, Hong Kong and France have also fallen by 5 percent. Tawan in Gulf countries is also a matter of concern for the market.