Sensex on Thursday plunged 1.59 per cent as a global sell-off triggered by the arrest of a top executive of Chinese telecom major Huawei in Canada hit the sentiment ahead of a crucial OPEC oil meet. Besides, rising anxiety among the participants ahead of assembly elections results and weakening of the rupee further dampened the mood.
The BSE Sensex plunged 572.28 points to close at 35,312.13. Similarly, the broader NSE Nifty fell 181.75 points, or 1.69 per cent, to 10,601.15.
Global markets nosedived after Huawei CFO Meng Wanzhou, who is also the company founder’s daughter, was arrested in Canada for extradition to the US. Oil stocks headed for their worst day in two-and-a-half years as crude prices spilled.
The weakening rupee, which plunged below the 71 per dollar mark intra-day, and fresh foreign fund outflows further dented the investor sentiment, analysts said. The rupee, which had strengthened above 70 level recently, closed 44 paise lower at 70.90 against the dollar.
Global headwinds: Markets in risk-off mode
Stock markets are in a risk-off mode due to fresh flare-up of tensions between China and US. Oil prices and weakening the rupee are also in focus. Investors, including mutual funds and foreign investors, are in a wait-and-watch mode on account of evolving global macro headwinds and upcoming state elections results. Markets can surprise on upside if macros stabilise in the coming weeks and election results come out in line with market expectations. What’s worrying the market is the recent rally in global markets on the back of a possible respite in the China-US trade war has come to a halt with the arrest of Huawei CFO for suspected Iran sanctions violations, dealing another blow to the relations between the two economic superpowers.
Vinod Nair, head of Research, Geojit Financial Services, said, “Global markets are in a risk-off mode due to fresh flare-up of tensions between China and US. Oil prices are inching up on expectation of production cuts by Russia and OPEC, weakening the rupee further. The sell-off was broad based, while IT and auto were the worst hit. Investors are in a wait and watch mode on account of evolving global macro headwinds and state elections.”
All sectoral indices on the BSE and NSE ended in the red, led by metal, oil and gas, pharma and financial stocks. Sun Pharma was the lone gainer in the 30-share Sensex pack. Maruti, Tata Motors, Reliance Industries, Yes Bank, Adani Ports, Bharti Airtel, Asian Paints, ONGC, HUL, Kotak Bank, IndusInd Bank and Axis Bank fell up to 4.63 per cent.
According to Abhijeet Dey, senior fund manager, BNP Paribas Mutual Fund, trading for the day began on a subdued note as the key benchmark indices saw a gap-down opening on negative Asian stocks. “Stocks extended initial losses in morning trade and weakness persisted through the day. Indices hovered near the day’s low in afternoon trade. Frenzied selling in index pivotals pulled the key benchmark indices lower and pushed them to finally close the day with losses of over 1.50 per cent. Investors are closely watching the meeting between the OPEC and other top oil-producing countries, later in the week. Investors also turned cautious in the run-up to the announcement of five state elections results next week,” Dey said.
“Markets were pressurised by weak global markets and anxiety ahead of key events. The sentiment was downbeat from the beginning, citing weak global markets ahead of the OPEC meet. Markets have been behaving extremely volatile for last one month and still there’s no sign of slowing down, thanks to the upcoming events like OPEC meet and assembly elections results. Such conditions pose a threat mainly to the traders as they end up losing on both sides,” said Jayant Manglik, president, Religare Broking.