Sensex crashes 1,689 pts on black money move and US polls, recovers

MUMBAI: The Sensex crashed 1,689 points in early trading on Wednesday after a surprise Donald Trump win in the US presidential election and the government’s move to withdraw high-value notes, but managed to pull back towards the end of the day’s trade to close 339 points lower. Investors became poorer by ₹1.75 lakh crore.

Shares of real estate companies came under severe pressure, with the BSE realty index falling by up to 17% on fears that the government’s move to demonetise currency notes of ₹500 and ₹1,000 will hit them the hardest since a lot of transactions in the sector still happens through cash. Indiabulls Real Estate plunged 19%, DLF and HDIL were down 17% each and Oberoi Realty ended down 10%.

The Sensex opened at 26,251.38, versus Tuesday’s close of 27,591.14. It hit a day’s low of 25,902.45, before closing the session at 27,252.53, down 1.2%.

The Nifty closed down 111.6 points, or 1.3%, at 8,432.

“The scrapping of high-value currency will be short-term negative for the economy. The Trump win too hadn’t been factored in immediately, and the two factors dragged markets down. However, some short-covering towards the second half and Trump’s statements that he aims to work closely with other countries calmed investors,” said Piyush Garg, chief investment officer, ICICI Securities.

Analysts see short-term chaos following the government’s move to demonetise ₹500 and ₹1,000 banknotes. “There will be an impact on consumption in the near-term, as many companies, particularly those in the unorganised sector, will be hit, Gard added.

Meanwhile, fears that Trump’s win took their toll on IT stocks, with TCS falling 5%, Infosys declining 3% and Wipro ending down 1.3% lower.

Pharma stocks, on the other hand, rose sharply with Dr Reddy’s ending up 5% and Sun Pharma rising 4% as the healthcare sector is expected to get a boost under Trump’s presidency.

Markets worldwide ended down up to 2%.