Trump, SBI, rupee, Tata Motors spook markets, Sensex tanks 699 points

MUMBAI:The Sensex plunged 699 points on Friday on rising worries that incoming US President Donald Trump’s policies could stoke inflation, leading to higher interest rates in the US.

The Sensex closed down 699 points, or 2.5%, at 26,818.82, and the wider NSE Nifty ended down 229 points, or 2.7%, at 8,296.30.

Besides, the rupee breaching the 67-mark against the US dollar by plunging 59 paise to 67.22 in intra-day trade at the foreign exchange market, too, had its bearing on the trading sentiment.

Industrial production grew 0.7% in September mainly due to poor show by manufacturing and mining sectors coupled with decline capital goods output.

“Markets feared that Trump’s growth policies may lead to rise in commodity prices. This may result in higher inflation in the US, which the Federal Reserve may tackle by raising interest rates. The accelerated hikes may cause outflows from emerging markets, including India, putting pressure on India rupee,” said Vaibhav Agrawal, head of research at Angel Broking.

Of the 30 Sensex stocks, 29 closed in the red led by Mahindra & Mahindra, which fell 6%. Among others, Tata Motors fell 5% after Tata Sons called for an extraordinary general meeting seeking to remove Cyrus Mistry and Nusli Wadia from the automaker’s board.

Bank shares also took a hammering as customers struggled to get their hands on new notes three days after the government’s shock decision to withdraw highdenomination bills from circulation. ICICI Bank plunged 5.32%, SBI fell 3.09%, while Bank of Baroda closed down 2.49%.

Markets are likely to remain volatile amid global uncertainties and “not-so encouraging domestic cues,” and so investors must restrict their leveraged positions and wait for the markets to stabilise, said Jayant Manglik of Religare Securities.