Sensex, Nifty fall over 1%; US markets surge after worst Sept in 2 decades

India’s equity markets witnessed fresh selling pressure on Monday, after pausing on Friday, as fears of a global recession and monetary policy tightening by central banks prompted investors to stay away from risky assets. Concern about global energy prices and the health of Swiss banking giant Credit Suisse also weighed on sentiment.

The Sensex declined 638 points, or 1.1 per cent, to close at 56,789, while the Nifty50 index fell 207 points, or 1.2 per cent, to end at 16,887. US stocks, however, kicked off the week with gains after seeing their worst September in two decades as Treasury yields halted a seemingly endless surge. The Dow Jones rose about 2 per cent, while the Nasdaq was up 1.3 per cent as of 21:10 IST.  

A rise in crude oil prices added to the selling pressure in the Indian markets. Brent crude rose over 3 per cent to edge closer to the $90-a-barrel mark. India’s manufacturing activity lost some steam in September and hit a three-month low.

Most European markets traded weak with shares of Credit Suisse tanking close to 10 per cent on concerns that the banking giant may be fighting for survival. A U-turn by the British government by rolling back its plan to scrap the top rate of income tax did little to cheer markets.

On Friday, foreign portfolio investors (FPIs) bought shares worth nearly Rs 600 crore. In September, they had turned net sellers after three months, selling shares worth Rs 13,405 crore. Experts said selling by FPIs, amid spiraling US bond yields and the dollar, had created fresh pressure points for the market.

"After struggling in the first half, heavy selling led to a sharp fall in the markets in the latter half of the day. Global nervousness increased, profit booking was witnessed in outperforming stocks and sectors like retail, auto, and FMCG. Expect the Nifty to remain sideways to weak for now, until we see some stability in global markets,” said Siddhartha Khemka, head of retail research, Motilal Oswal Financial Services.

Ajit Mishra, VP of research, Religare Broking, said that in the absence of any major event, participants would be eyeing global markets for cues.

“The markets have been showing tremendous resilience amid tough global conditions. However, it would be hard to hold if the situation deteriorates further. We’re eyeing 17,000 as a major support in the Nifty, while 17,800 would continue to act as a hurdle. Banking and financial packs have played a critical role in capping the damage so far and their performance would remain the key ahead also as heavyweights like Reliance and IT majors are not showing any sign of respite. We thus recommend restricting positions to select sectors and stocks which are outperforming the benchmark,” he said.