A host of global as well as domestic events are aiding to the catastrophe in the markets. In trade today, Nifty as well as Sensex have shed 1.5% and have been trading at 36,544 and 10,826 points respectively. Some of the reasons that cause today's jitters in the indices include:
1. Panic situation in the state of J&K: After a flare up of hostility along the LoC with Pakistan and terror threats, fear mongered among regional leaders of being arrested. The crisis deepened after the government proposed to scrap Article 370 and Article 35A of the Constitution. And in its wake, investors pressed the panic button. As per the latest news, Amit Shah has moved the resolution to revoke Article 370 from J&K and the state will be made a UT.
Article 370 grants an autonomous status to J&K, while Article 35Aprovides special rights and privileges to the citizens of the state.
2. Global headwinds led by escalation in US-China trade talks: US-China trade situation has once again deepened after the US threatened to impose tariff on Chinese imports worth $300 billion. And in its wake China was vowed to retaliated. Already the trade war situation has spooked global economy as it threatens to impact economic growth amid slowdown situation.
3. Continuing FPI outflow: FPIs have been net sellers in India given the recent imposition of surcharge on super-rich category, which also brings in some of the foreign funds into the category. As per the recent data, FPIs pulled out a net sum of Rs 2,632.58 crore from equities and Rs 248.52 crore from the debt segment during August 1-2, taking the cumulative net outflow to Rs 2,881.10 crore. This has been weighing on the investor sentiment to a great degree.
4. Auto slump signals economic slowdown: The slump in the auto sector, imminent by the drooping sales, has led the industry to cut down on temporary staffing as well as shut down few of the many dealership outlets. The crisis has been deepening since the liquidity crisis in the NBFC space.
5. Earnings disappointment: Corporate earnings have been too a dampener and failed to lift the market sentiments amid global and domestic headwinds.