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Monday, July 23, 2018

Sensex plunges 221 points after US strikes in Syria

The benchmark Sensex tanked 221 points while the Nifty ended below the 9,200-mark even as safe haven assets and crude oil prices surged.

By: ENS Economic Bureau | Mumbai | Published: April 8, 2017 3:07:36 am
 India, India-Sensex, US, United States, US missile strikes in Syria, Syria crisis, syria civil war, Russia, India news, indian economy, indian express The Bombay Stock Exchange. (File Photo)

India joined a global stock market rout on Friday after the US launched missile strikes on Syria, fanning geopolitical concerns and raising the prospect of frictions with Russia. The benchmark Sensex tanked 221 points while the Nifty ended below the 9,200-mark even as safe haven assets and crude oil prices surged.

However, ignoring global volatility and nervousness, the rupee continued its rally against the US dollar, surging 24 paise to end at a fresh 20-month high of 64.28 amid escalating geo-political trouble. This is its highest closing since August 11, 2015, when it had ended at 64.19 against the greenback.

With oil rising around two per cent, the 30-share Sensex stayed in the negative zone for the whole day and settled lower by 220.73 points, or 0.74 per cent, at 29,706.61. This is its lowest level since March 31, when it had closed at 29,620.50. The gauge had lost 46.90 points in the previous session after the Reserve Bank left the key policy rate unchanged, in line with market expectations. The broader Nifty too succumbed to selling pressure and slipped below the 9,200-mark to hit a low of 9,188.10, before ending at 9,198.30, down 63.65 points, or 0.69 per cent.

According to analysts, profit-booking by participants in view of the domestic markets’ recent record-setting run also fuelled the downtrend. Crude oil futures climbed to their highest in more than a month Friday morning, as US air strikes on Syria raised concerns about a wider conflict in the Middle East. WTI light sweet crude oil was up 51 cents at $52.21 a barrel.

Among other Asian markets, Hong Kong plunged 1.1 per cent, Shanghai slipped 0.2 per cent, Sydney fell 0.3 per cent and Seoul was 0.4 per cent off. Tokyo ended the morning 0.1 percent lower as the soaring yen — which was sitting at lows not seen since November — hit exporters. In Europe, most indices retreated, with London’s FTSE falling 0.10 per cent, France’s Paris CAC-30 down 0.30 per cent and Germany’s Frankfurt falling 0.50 per cent in their early trade.

Jayant Manglik, president, Retail Distribution, Religare Securities, said, “Nifty lost over half a per cent in a volatile trading session, pressurised by weak global cues. The sentiment was downbeat from the beginning in reaction to the news of US missile attack on the Syrian airbase. However, clearance of crucial GST legislation in Rajya Sabha restricted the damage and helped index to recoup some losses in the mid-session. But it couldn’t sustain at higher levels for long and slid almost vertically in last hour of the trade, citing weakness in the European markets.”

“If this geo-political tension escalates further, Nifty may retrace to 9100 in the near future but it will not change the prevailing uptrend,” said an analyst. Volatile dollar overseas along with uncertainties surrounding US President Donald Trump’s fiscal policy helped the rupee close higher, he said. “Risk appetite took a hit after geopolitical tensions pulled global equities down. Soaring oil prices and continuing strength in rupee also distorted the usual sectoral diversification themes,” said Anand James, chief market strategist, Geojit Financial Services.

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