Markets plunge over trade war concerns
MONDAY BLUES The Sensex closed at 37,922.17, down by 467.65 points, its biggest singleday fall since March 16
Stock markets tanked more than 1% to close at threeweek low levels Monday following a global slide in equities due to trade war concerns which also dragged the rupee to a record low of 72.67 in day trade.
The benchmark 30-share BSE Sensex closed at a three-week low of 37,922.17, down by 467.65 points or 1.22%, which was its biggest single-day fall since March 16 when it lost 509.54 points. The 50-share NSE Nifty also dropped below the 11,500-level by plunging 151 points or 1.30%—its biggest single-day fall since February 6—to close at 11,438.10, the lowest closing since August 16. Intra-day, it hit a low of 11,427.30.
Negative leads from global markets as investors turned cautious amid fears of a possible escalation in the US-China trade conflict hit the market sentiment. “Markets slid as fears of escalating US-China trade war dented the confidence. As a direct impact of rising crude oil price, widened current account deficit and strengthening dollar on account of a strong US job data, rupee succumbed to a new low and 10-year yield rose further,” Vinod Nair, head of research, Geojit Financial Services Ltd said.
US President Donald Trump on Friday threatened to slap tariffs on all Chinese imports, fanning fears of intensifying trade war between the two major econ- omies and their ripple impact on emerging markets. Beijing also warned of retaliation if the US goes ahead with any new measures. Sentiment also took a blow after Moody’s Investors Service said sustained weakening of the rupee is “credit negative” for Indian companies which generate revenue in rupees but rely on US dollar debt to fund their operations.
The Indian rupee has depreciated 13% so far in 2018 and touched a historic low of ₹72.67 to a dollar Monday before a rebound on strong intervention of the Reserve Bank. Surging crude oil prices globally too had a rub-off effect on Indian stocks and rupee, market analysts said.
Meanwhile, India’s current account deficit (CAD) widened to $15.8 billion in April-June this year as against $15 billion in the same quarter of 2017-18 in value terms, mainly due to a higher trade deficit, according to RBI data released on Friday.
Sun Pharma continued its slide and emerged as the worst performer among Sensex constituents by dipping 3.72%. The stock witnessed heavy selling since Friday on reports that the USFDA had issued observations related to testing procedures at its Halol plant. Mahindra & Mahindra was the second largest loser as it dropped 3.64%. HDFC Bank and HDFC declined by 2.54% and 2.14% while banking major SBI fell 2.35$.
Reliance Industries declined by 1.54% and Coal India by 1.96%, dragging the index to three-week lows. Other laggards were Vedanta Ltd, IndusInd Bank, Asian Paint, ONGC, Bajaj Auto, HUL, Kotak Bank, Adani Ports, Hero MotoCorp, PowerGrid, ITC Ltd, Maruti Suzuki, Bharti Airtel, Tata Steel, Tata Motors, L&T, ICICI Bank, NTPC and Infosys, falling up to 3.44%.
In the global markets, Asian equities were weak. Hong Kong’s Hang Seng closed 1.30%, while China’s Shanghai Composite Index fell 0.98%. Japan’s Nikkei, however, edged up 0.31%. European indices too were trading lower in their late morning session amid ongoing concerns over global trade. Paris CAC 40 shed 0.07%, while Frankfurt’s DAX slipped 0.12%. London’s FTSE too edged lower by 0.1%.
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