The BSE benchmark Sensex on Wednesday plunged by 354 points amid weak global cues triggered by the downgrading of global growth rate by the International Monetary Fund (IMF) and eruption of fresh trade tensions between the United States and the European Union.
The Sensex lost 353.87 points, or 0.91 per cent, to close at 38,585.35, while the broader NSE Nifty dropped 87.65 points, or 0.75 per cent, to 11,584.30.
While the market sentiment was hit by the IMF move to downgrade the global growth forecast to 3.3 per cent for 2019, investors also turned cautious ahead of the first phase of the Indian general elections and the fourth quarter earnings season.
Globally, stocks wobbled after US President Donald Trump threatened to slap tariffs on goods imported from the EU, ratcheting up global trade tensions.
The IMF’s World Economic Outlook report projected a slowdown in growth in 2019 for 70 per cent of the world economy.
India is projected to grow at 7.3 per cent in 2019 and 7.5 per cent in 2020, reflecting the recent revision to the national account statistics that indicated somewhat softer underlying momentum, the report said.
“Markets slid ahead of the start of the first phase of polling and renewed concern on global economic growth after IMF downgraded the growth forecast to 3.3 per cent for 2019. The rupee remains strong and FIIs inflow is steady … which will cap the downside. Election-led consolidation may be short-lived and the key trigger will be the earnings growth which is expected to start revive from fourth quarter onwards,” said Vinod Nair, head of research, Geojit Financial Services.
HDFC Bank slumped 2.07 per cent, while HDFC lost 1.96 per cent. Other top losers in the Sensex pack included Bharti Airtel, Asian Paints, TCS, HCL Tech, Tata Steel, SBI, IndusInd Bank and Hero MotoCorp, declining up to 3.28 per cent. Tata Motors, HUL, Kotak Bank, Coal India, Sun Pharma, M&M, Bajaj Auto and ONGC were the gainers, spurting up to 4.68 per cent.
“The sentiment was affected on the news that IMF had lowered global economic growth outlook and fresh trade tensions have erupted between US and EU. Investors also seemed to be cautious awaiting Q4 March 2019 earnings beginning later this week,” said Deepak Jasani, head—Retail Research, HDFC Securities.
In Asia, Japan’s Nikkei dropped 0.53 per cent and Hong Kong’s Hang Seng fell 0.13 per cent. Korea’s Kospi rose 0.49 per cent, while Shanghai Composite Index inched up 0.16 per cent. In Europe, Frankfurt’s DAX was up 0.41 per cent, Paris CAC 40 rose 0.38 per cent and London’s FTSE gained 0.02 per cent in early deals.
The benchmark Brent crude futures rose 0.67 per cent to $ 71.08 per barrel.
Meanwhile, rising for the second straight session, the rupee advanced 19 paise to close at 69.11 against the US dollar on strong foreign fund inflows amid the greenback’s weakness against key rivals overseas. The rupee opened at 69.26 and advanced to a high of 69.09. It finally settled at 69.11. The rupee had strengthened by 37 paise Tuesday to close at 69.30 against the US dollar.
“Rupee bulls are having upper hand over the American dollar amid expectation of inflows through Vodafone-Idea right issue ($ 4 billion), Baring’s investment in NIIT ($ 400 million) and Essar Steel acquisition ($ 7 billion),” said V K Sharma, head—PCG and Capital Markets Strategy, HDFC Securities.