Posting losses for the fourth session in a row, India’s benchmark Sensex on Monday plunged over 491 points amid fears over Indo-US import tariff tussle and fresh geopolitical tensions in the Middle East.
The BSE Sensex settled 491.28 points, or 1.25 per cent, lower at 38,960.79. The index hit an intra-day low of 38,911.49 and a high of 39,540.42. Similarly, the broader NSE Nifty cracked 151.15 points, or 1.28 per cent, to close at 11,672.15. During the day, the index touched a low of 11,657.75 and a high of 11,844.05. Concerns over the poor advancement of monsoon also unnerved market participants, analysts said.
India has effected a hike in customs duties on as many as 28 US products, including almond, pulses and walnut, in response to higher tariffs imposed by Washington on Indian products like steel and aluminium. This move has raised fears over retailiatory measures from the US side.
The rupee also fell by another 11 paise to close at 69.91 against the US dollar in line with intense sell-offs in domestic equities amid concerns over Indo-US trade tariff disagreements.
The Sensex has lost 796 points or 2 per cent in the past four sessions. Sectorally, BSE metal was the worst hit, losing over 3 per cent, while energy index fell over 2 per cent on Monday. The broader BSE midcap and smallcap indices followed benchmarks, dropping up to 1.35 per cent. Tata Steel emerged as the biggest loser with over 5 per cent fall.
Higher tariff on US goods a fresh concern
While US-China trade war has been hurting the markets worldwide, India’s retaliatory move to impose higher tariff on products imported from US over the weekend raised fresh concerns for markets and premier indices lost over 1.2 per cent. Market participants who were worried over domestic and global growth, continuing liquidity issues being faced by financial institutions and high valuations have to now also keep an eye on India’s trade relations.
“Domestic market has been caught in a bearish grip as investors are increasingly turning cautious led by global trade war which has got murkier. Additionally, geopolitical tensions in the Middle East triggered a sudden spurt in oil prices. Domestic market consolidation will be maintained till global events unfolds like central bank and GST council meet this week,”said Vinod Nair, head of research, Geojit Financial Services.
“Weak global cues combined with feeble domestic data were weighing on the sentiment from the beginning. It gradually drifted lower as the day progressed and settled around the day’s low. All the sectoral indices traded in line with the benchmark index and ended lower. Markets are currently facing headwinds from both domestic and global fronts, citing delay in arrival of monsoon, lingering geo-political tension and rebound in the crude oil prices. Earlier, it was only the broader indices which were feeling the pinch and now the benchmark has also joined in,” said Jayant Manglik, president, Religare Broking.
Jagannadham Thunuguntla, Head of Research, Centrum Broking, said, “the ambiguity of portfolio allocation is now removed, so this is good for the market in a sense. We will get to see new finance minister Nirmala’s proposals and approach in the budget due in about a month. The emergence of clarity is what was important, and now the narrative in markets will be about the economic policies that will be adopted to revive and stimulate the slowing economy.” Meanwhile, the domestic currency has lost 57 paise 69.91 in the last three sessions.