The Indian markets that lost over 2 per cent on Thursday, continued their slide and fell sharply by up to 3.5 per cent in early trading hours on Friday in line with global sell-off as markets worldwide fell sharply following US Federal Reserve’s gloomy picture for the US economy in the coming years and rise in Coronavirus infections in the US and other countries.
The Dow Jones in the US fell sharply by 6.9 per cent on Thursday and the Nasdaq too fell 5.3 per cent. The premier indices in UK, Germany and France also fell sharply between 4 and 4.7 per cent on Thursday.
On Friday, the Indian markets opened weak, taking cues from the global markets and the Sensex at BSE fell by up to 1,190 points or 3.5 per cent before recovering by noon to trade at 33,075 down by 1.35 per cent. The Nifty at NSE was down 134 points or 1.36 per cent at noon, trading at 9,767.
Even the rupee lost value against the US dollar on Friday and was trading 16 paisa lower at 75.94 to a USD.
Why have the sentiments weakened?
The sentiment across the world took a beating after US Fed Chairman Jerome Powell said it may take several years for millions of jobs to return to people in the US economy. Unemployment has soared to record levels in the US in recent months, with 43 million people filing claims since the pandemic hit the country.
📣 Express Explained is now on Telegram. Click here to join our channel (@ieexplained) and stay updated with the latest
The Fed’s updated policy statement and projections indicated that it expects a 6.5 per cent contraction by the end of the year on a year-over-year basis, with the unemployment rate ending at 9.3 per cent, well above the Fed’s estimate of the long-run rate forecast of 4.1 per cent. The number of US coronavirus infections passed the two million mark and over 112,000 Americans have died, leading investors to worry about a second wave of the epidemic just as business activity is resuming.
In line with global growth concerns, India is also expected to register contraction in GDP growth in FY’21 as a result of the impact of pandemic on economic activity across the country. On Thursday, India witnessed its highest ever fresh Covid-19 cases at over 10,900 and 396 deaths.
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines