Domestic markets on Tuesday joined a global stock sell-off as the trade dispute between the US and China showed signs of deepening and accelerating. The BSE Sensex plunged around 262 points to end at a two-week low of 35,286.74, while the broader Nifty dropped 89 points to 10,710.45.
The rupee also nosedived by 39 paise to hit a near one-month low of 68.38 against the US dollar on heavy dollar demand.
Asian markets nosedived after US President Donald Trump threatened to impose additional tariffs on Chinese goods and Beijing vowed to retaliate, fanning fears of a full-blown trade war. In Asia, Hong Kong’s Hang Seng tanked 2.94 per cent, Japan’s Nikkei declined 1.73 per cent and China’s Shanghai Composite Index slumped 3.82 per cent. Taiwan and Singapore also closed with losses. European markets too were down in their early session. Frankfurt was trading lower by 1.58 per cent, while Paris CAC 40 fell 1.16 per cent. London’s FTSE was down 0.74 per cent.
Sustained selling by foreign funds and a weak rupee added to the weak sentiment. “Escalating trade disputes between US and China is impacting global market and the ripple effect dented the domestic market sentiment. Lack of fresh triggers and weakening rupee may lead the market to consolidate further. Consolidation in oil price in expectation of gradual increase in output ahead of OPEC meet may provide some support to INR,” said Vinod Nair, head of research, Geojit Financial Services.
Vedanta was the biggest loser in the Sensex pack, sinking 3.55 per cent, followed by Adani Ports that fell 2 per cent. ITC, HDFC Bank, HDFC Ltd and ONGC managed to close in the green. All sectoral indices finished with losses. Metal fell 1.69 per cent, followed by realty (1.33 per cent), oil and gas (1.22 per cent), IT (1.21 per cent), teck (1.08 per cent), PSU (1.07 per cent), auto (1.06 per cent), power (1.02 per cent), consumer durables (0.93 per cent), capital goods (0.91 per cent), infrastructure (0.71 per cent) and banking (0.64 per cent).
The BSE small-cap index fell 1.29 per cent and the mid-cap index lost 0.98 per cent.
Abhijeet Dey, senior fund manager-equities, BNP Paribas Mutual Fund, said, “stock markets in India started the trading on a flat note and turned weak in response to a weak trend in the global market as the trade spat between the US and China intensified. Persistent selling of Indian equities by foreign institutional investors also dampened the investor sentiment.
Both the benchmark Sensex and the Nifty finally closed the day with sharp losses. Overseas, European and Asian stocks edged lower as well after US President Donald Trump commented on imposing additional trade tariffs on China.” Analysts said tough trade talk is nothing new for investors in 2018, the perception that stress is ratcheting up between the US and China is taking a toll on markets. The protectionist moves come at a time when many are already voicing concern that global growth could lose momentum as the US tightens monetary policy and Europe pulls back on stimulus.
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