NORTH KOREA’S HYDROGEN BOMB TEST UNNERVES MARKETS, RUPEE

Escalating military tensions between the US and North Korea rattled stock markets worldwide, sparking a sell-off in India on Monday.

After North Korea tested a hydrogen bomb on Sunday, US President Donald Trump warned that any nation doing business with the regime would have economic sanctions and trade embargoes slapped on it. Energy from the underground explosion was six times stronger than the nuclear test of a year ago, South Korea’s weather agency said.

After a sharp fall of 1% during the day, Indian markets recovered slightly at the closing. The BSE Sensex ended at 31,702.25 points, down 189.98 points or 0.6%. The NSE Nifty slipped 61.55 points, or 0.62%, to 9,912.85. Among sectoral indices, IT stocks were biggest losers with Infosys Ltd dropping over 2%. The BSE IT index fell 1.02%. Benchmark indices across Asia also lost around 1% while Europe stocks were also lower during the day.

“Equity markets in India traded on a tenuous note today as weakness in global markets coupled with a slide in key index heavyweights hit sentiment,” said Karthikraj Lakshmanan, senior fund manager, equities, BNP Paribas Mutual Fund.

The geopolitical tensions also added to market volatility, with the India VIX index, or the ‘fear index’, climbing 14.26% at 13.34 at the closing. In the day, VIX had jumped 19% to 13.96, its biggest rise since September 29, 2016. VIX is an indicator of investors’ perception of a market’s volatility in the near-term.

Since the beginning of 2017, FIIs have bought a net $7.16 billion of stocks and mutual funds.