Sensex bleeds 514 points to 6-month low on fund outflow, weak rupee

The Sensex opened lower at 26,809.61 and dropped further before ending down 514.19 points, or 1.92 per cent, at 26,304.63, a level last seen on May 25. It had lost 698.86 points on Friday on worries that US President-elect’s Donald Trump’s impending reforms may spark outflows from emerging markets. The NSE Nifty fell sharply by 187.85 points, or 2.26 per cent, to 8,108.45, its lowest closing since June 27 when it settled at 8,094.70. Intra-day, it cracked below the 8,100-mark to hit a low of 8,093.20.

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Tata Motors was the biggest loser from the Sensex pack on the day, plunging 9.88 per cent to Rs 457.25. The broader markets too remained under pressure, with the BSE small-cap index slumping 4.67 per cent and the mid-cap 3.91 per cent.

Analysts said the sentiment continued to be weighed down by the government’s move last week to withdraw high-value currency notes and disappointing quarterly earnings by some more blue-chip companies. There’s a fear that consumer demand will fall significantly in the near term due to demonetisation, leading to a decline in the GDP growth. “Persistent capital outflows from emerging markets amid all major Asian currencies declining against the US dollar since Trump’s shock win in the US presidential election on November 8 was another factor behind the big plunge on the domestic bourses,” analysts said.

Meanwhile, government data released on Friday showed that industrial production grew a meagre 0.7 per cent in September, mainly due to poor show by manufacturing and mining sectors coupled with decline in capital goods output.

Among Asian currencies, Malaysia’s ringgit and South Korea’s won lost at least 2.8 per cent each. A gauge of the greenback erased its losses this year as US Treasury yields surged on speculation that Trump’s pro-growth policies would boost inflation and push interest rates higher. Rising protectionism and trade conflicts with China are major concerns as Asian markets wait for policy clarity from a US administration led by President elect Donald Trump. During the election campaign, Trump pressed for sharp increases in tariffs with China as well as accusing Beijing of being a “currency manipulator” in order to favour its exports. Business analysts and economists in Asia say any policy of trade protectionism would negatively impact the global economy.