Indian equity benchmarks got off to a rocky start on Monday as global stocks languished at their lowest levels since late 2020, when the global economy was still recovering from the coronavirus pandemic, setting the stage for a poor final quarter of the year.
The market mood was fragile on Monday as crude prices jumped over 4 per cent on a potential cut in production by oil producers, exacerbating fears of even higher inflation and a stronger policy response from central banks around the world would increase the likelihood of a global recession.
After a 10 per cent surge in the previous quarter, including their biggest single-day jump in a month on Friday, both Indian benchmark bourses crashed at the start of October on Monday.
The BSE Sensex index plunged 638.11 points to end at 56,788.81, and the broader NSE Nifty crashed 207 points to 16,887.35, after data showed India's factory activity fell to a three-month low.
Maruti, Hindustan Unilever, IndusInd Bank, ITC, Bajaj Finance, State Bank of India, and Kotak Mahindra Bank were the Sensex stocks that underperformed the market the most. The winners were Dr Reddy's, NTPC, Bharti Airtel, and Wipro.
European equity markets were a sea of red, with the STOXX 600 index down 1.4 per cent, while US stock futures were mixed, the MSCI's global equity index hit its lowest level since late 2020.
Even the British government's tax U-turn that had rocked British markets didn't seem to improve the general mood, even as that helped the pound recoup all its losses.
Stephen Innes, Managing Partner at SPI Asset Management, had told Reuters that last week's meltdown in UK markets, following Britain's September 23 "mini budget", suggested a bear market in stocks had entered a new phase.
"Market fragility heading into Q4 means it is time to get comfortable being uncomfortable," he said.
"Getting out of more than a decade of cheap money and liquidity injections was always tricky. But the Fed has not blinked in the face of sliding equity markets, quite the contrary," Mr Innes added.
But Asia's trade was generally quiet on Monday, as China began its "Golden Week" break and South Korea observed a national holiday. Hong Kong will be closed for a public holiday on Tuesday.