Indian Market We have still not recovered from the big fall, while the Indian economy is running at its own pace. America and Japan have played an important role in bringing down the Indian stock market. Actually, the recession in America and the change in the rules related to Yen carry trade in Japan put investors all over the world in trouble. The process of withdrawing money from the Indian market, which started by foreign investors after the concerns born in America and Japan, is still continuing. This is the reason why the Indian stock market has not yet recovered from last week’s huge fall. Let us know how the change in the rules related to Yen carry trade in Japan created chaos in the Japanese market, the effect of which was also seen on the Indian markets.
Stock markets around the world crashed last week
Last week, amid fears of recession in the US, the stock markets across the world crashed due to heavy selling pressure. But the fall in the Japanese stock market was so huge that it shocked the whole world. This fall in the Japanese stock market was recorded as the biggest fall since 1987. The special thing is that apart from the concerns about the US economy, there was another big concern in this fall and this concern is related to the Yen carry trade. Here, along with the Yen carry trade, we will also try to know whether the Japanese stock market also affects the Indian stock market?
Yen Carry Trade
Actually, investors from all over the world have been taking advantage of Japan’s very low interest rates for the last several years. This advantage was being taken by a strategy called “Yen Carry Trade”. Under the Yen Carry Trade, investors borrow money in Yen at low interest rates and then invest this money in high-return assets like shares or bonds in other countries. But this strategy of investors suddenly got a big shock. Japan’s central bank, the Bank of Japan, increased its interest rates, which were almost equal to zero, to 0.25%.
What impact did the Bank of Japan’s decision have on the market
This decision of the Bank of Japan shocked the stock market badly. In such a situation, investors who had borrowed money from Japan and invested it elsewhere started incurring losses. As a result, investors started withdrawing the money invested in Japanese assets rapidly. As a result, on Monday last week, Japan’s primary stock market benchmark index Nikkei 225 fell by more than 12% in a single day, which was the biggest fall since the Black Monday crash of 1987. However, the Japanese currency Yen suddenly became very strong due to this decision of the Bank of Japan.
Many Asian markets felt the pain of the decline in the Japanese market
Due to this fall in the Nikkei 225 index, it fell down by about 20 percent from its top level. This ‘destruction’ in the Japanese market also affected other Asian markets. South Korea’s Kospi and Taiwan’s market fell by about 8 percent. Not only this, the effect of this fall in the Japanese market also reached Hong Kong and China. But the fall here was not so worrying or serious.
What was the impact on the Indian stock market
The direct impact of the catastrophe in the Japanese stock market was also seen in the Indian stock market. On Monday last week, the Sensex fell by 2.74% and the Nifty 50 index by 2.68%. Due to this fall, investors investing in Indian stocks suffered a loss of more than Rs 17 lakh crore. However, the Indian market was spared as compared to the impact of the fall in the Japanese market which was seen in the markets of South Korea and Taiwan. It cannot be ignored that the Indian stock market now looks much more balanced than in the old times, which has recently faced big events like the results of the Lok Sabha elections 2024 and the Union Budget.
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