Sensex Crash | The Sensex is Crashing

Indian stock analysts and economists tried to sooth the growing fears of Indian and international investors as the Sensex plummeted on Monday and Tuesday. World markets were torpedoed on Monday and Tuesday as growing fears about the state of the world's largest economy, the United States, started to reach panic levels.

There is growing concern that the United States might not only hit a recession, but a nasty one at that. A major recession in the United States would cripple the global economy, especially those in rapidly growing nations funded by Western investment such as India and China. The "Sensex", a barometer of the Indian stock market, plummeted in early trading on Tuesday, shedding as much as 11.5% right off the opening bell, causing trading to be halted for an hour.

The Sensex is currently trading down over 8% on the day at 16,120.08, rebounding after hitting a low of 15,332.42. It seems to be losing strength though, as it has traded down at least 500 poitns in the last hour or so. Keep in mind that the Sensex was trading at 20,000 on January 16th. That is an incredibly sharp fall over a week of trading. The Sensex has lost 20% of its value in just five short days.

Analysts in India tried to make the point that the Indian economy didn't change overnight, so there is no reason for this panic. This is true, but if the United States suffers through a crippling recession then India will take a beating due to decreased investment in the country. When a company is trudging through a rough patch due to a bad economy, the first thing that they usually do is cut their research and development.

This market and others in Asia, Europe and across the world will be looking to the US stock market for direction for the rest of the week. If the US market crashes on Tuesday, then there should likely be some more bloodshed on the Sensex. If the American stock markets rebound (possibly due to an emergency rate cut), then the Sensex will rebound very strongly as well.

The entire world will be looking to the US stock market indexes on Tuesday, and holding their breath.

Filed under: The Economic Meltdown | General Market News