Domestic market indices fell for the fifth day in a row, as weaker-than-expected jobs data in the United States fueled worries of a weakening economy, sending equities down internationally. While a 25 basis point rate decrease was expected, the market is concerned that such a cut will be inadequate. Furthermore, investors are concerned that a rate decrease of up to 50 basis points may foreshadow a recession in the world's largest economy.
The BSE Sensex declined 169.57 points (0.21 percent) to 81,014.36. The BSE barometer fell for the seventh consecutive day. The NSE Nifty lost 54 points (0.22 percent) to 24,798.15. This indicator was down for the fourth consecutive session.
"The stock market has made a strong negative swing, with attitude moving from euphoria over lower US inflation to fear about a possible US economic downturn. Friday's weaker-than-expected jobs report has revived recession worries, which have been exacerbated by dismal manufacturing updates, according to Prashanth Tapse, Senior VP (Research) at Mehta Equities.
The US job market is stagnating, and risks remain tilted to the downside, according to Nomura India. However, recent statistics indicate that gradual cooling is more likely than a dramatic downturn. The brokerage stated that all eyes will be on the US CPI this week.
"We anticipate a modest 0.173 percent MoM reading. This is consistent with continued disinflationary progress, and the Fed's focus remains on the labor market. NY Fed President Williams stated that he has not made a decision on the easing increment and that the Fed has no overarching principle on the rate of easing."
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said the market is expected to get turbulent in the few days, as seen by a 12% increase in the CBOE VIX to 23.50. "Whether the Fed cuts rates by 25 bps or 50 bps in September will be closely watched," he added.
"A 25 basis point decrease may be insufficient in the face of a weakening economy, whilst a 50 basis point cut may reinforce recession worries. "This quandary must be resolved by Fed Chairman Powell in his message," Vijayakumar stated.
SpiceJet shares soared 5% to Rs 64.55 on news that promoter Ajay Singh was considering to sell more than 10% of the airline to obtain finance. The most recent investment round is slated to close by the end of September.
Jio Financial Services Ltd (JFS) was up 0.10 percent to Rs 337.25 after forming a joint venture with BlackRock Advisors Singapore to provide investment advice services, subject to regulatory approval.
Mazagon Dock Shipbuilders Ltd (MDL) rose 0.64% to Rs 4,428.60 after the state-run PSU announced that it had won a subsea pipeline replacement contract from Oil and Natural Gas Corporation Ltd (ONGC) on an EPC reimbursable basis (OBE) at a ceiling price of Rs 1,486.40 crore, including all taxes and duties.
Suzlon Energy Ltd dropped 1.11 percent to Rs 73.90. The renewable energy solutions provider has acquired 51% of the equity share capital of Renom Energy Services. Renom Energy Services is officially a subsidiary of the firm, according to Suzlon Energy's post-market announcement on Friday.
