Markets fall over rising India-pakistan tensions
Sensex plunges nearly 500 pts before closing 240 pts lower
NEWDELHI: India’s equity and currency markets fell on Tuesday shortly after reports emerged of India’s air strikes on terror camps inside Pakistani territory, but market experts said they did not see any major sign of nervousness among investors and that the slump presents itself as a buying opportunity.
The benchmark BSE Sensex fell 0.66% to 35,973.71 points and the broader NSE Nifty fell 0.41% to 10,835.30 points when they closed for trading, while the rupee weakened by 10 paise at ₹71.07 to the US dollar.
Commenting on the volatility, a report by HDFC Securities said: “Nifty slipped into a sharp weakness on the opening, amidst the news of Indian Air Force conducting strikes on terror camps of Pakistan. It later recovered from the lows, but was not able to close near the day’s high”.
Experts said investors showed resilience that prevented a sharp fall. “India continues to enjoy a stronger footing financially and therefore the markets would take this into its stride. Generally impact of any geopolitical event is felt over a number of days and looking at today’s (Tuesday) trading session, it seems India’s financial markets have not seen any extraordinary move in equity, currency or bond markets,” Vinay Khattar, head, Edelweiss investment research, said.
Khattar expressed confidence in the tenacity of the Indian economy. “The denial by Pakistan establishment points to the fact that the military escalation may be limited. In any case as conflicts/wars are generally short lived specially given the fact that the other side has very little financial muscle to wage a war,” he said.
“There are some uncertainties as to how Pakistan will react. That is why there is some weakness in market segments. I believe, it is short-lived. It is difficult to imagine that this will escalate (into a war). The market had a knee-jerk reaction, which is, in fact, an opportunity,” said Gaurav Dua, the head of research at Sharekhan Ltd.
Today’s closing well off the intraday lows tells us there was ample institutional support at lower levels, said market expert and chief executive of Bsplindia.com, Vijay L Bhambwani. “The NSE F&O (futures and options) turnover at ₹11,90,981 crores is above average, showing decent participation. The wheels of the financial machine and
AMONG THE SENSEX CONSTITUENTS, HCL TECH DECLINED THE MOST, DIVING 2.26%, FOLLOWED BY HDFC, WHICH LOST 2.10%
financial markets were well oiled and moving smoothly. The absence of nervousness is itself a welcome indicator,” he said.
According to Bhambwani, this was a positive signal sent out by markets on Tuesday. “Now await any reprisal, if any, from the other side. But in any crisis, the first 100 hours are crucial. After this, even if any action is forthcoming, the public and emotions have had enough time to stablise,” he said.
Weak cues from global equities and selling pressure on financials and realty stocks too weighed on market mood.
After cracking nearly 500 points, the Sensex pared some losses but ended 239.67 points lower on Tuesday. It hit a low of 35,714.16 and a high of 36,172.52 points.
Among Sensex constituents, HCL Technologies suffered the most by diving 2.26%, followed by HDFC shedding 2.10%.
Other big losers were ICICI Bank down 2.08%, Infosys 1.75%, State Bank of India 1.44%, Vedanta 1.20%, Hero Motocorp Ltd 1.15%, Reliance Industries Ltd 1.01% and Larsen & Toubro Ltd 1%. Also, Bharti Airtel fell 0.88 %, Indusind Bank 0.79%, ITC 0.65%, Kotak Bank 0.44%.
However, Bajaj Auto and Asian Paints managed to end positive.