Elec­tion Anx­i­ety, US-China Ten­sion Pull Stocks Down

Fear of mixed out­come in poll re­sults, global fac­tors have turned in­vestors risk averse

The Economic Times - - Front Page - Our Bureau

Mum­bai: In­dian stock in­dices fell to their low­est level in two weeks on Thurs­day mir­ror­ing weak­ness in global mar­kets on con­cerns over pos­si­ble wors­en­ing of the US-China trade dis­pute with the ar­rest of Huawei’s chief fi­nan­cial of­fi­cer in Canada. In­vestor sen­ti­ment was wob­bly also be­cause of un­cer­tainty over the out­come of key state elec­tions next week, seen as the pre­cur­sor to the 2019 gen­eral elec­tions.

The Sen­sex fell 572.28 points, or 1.6%, to close at 35312.13 and the Nifty ended down by about 182 points, or 1.7%, at 10601.15. On Wed­nes­day, both in­dices fell 0.7% each.

Asian mar­kets ended down 12.5% af­ter Cana­dian au­thor­i­ties ar­rested the CFO of Chi­nese tech giant Huawei to be ex­tra­dited to the US, spark­ing fears that the on­go­ing at­tempts at a cease­fire in the trade dis­pute would be af­fected. US Pres­i­dent Don­ald Trump and Chi­nese leader Xi Jin­ping re­cently gave ne­go­tia­tors three months ₹ ₹ 7,201 5,641 695 162.5 795 1,012.35 1,119.05 363.75 168.35

DIIs net sold shares worth 389.78 cr on Thurs­day

to re­solve their trade spat. “A com­bi­na­tion of fac­tors like global slow­down, delay in re­cov­ery of earn­ings and fear of mixed out­come in the five state elec­tion re­sults due to be out next week are forc­ing in­vestors to exit for the time be­ing,” said A Bala­sub­ra­ma­nian, CEO, Aditya Birla Sun Life AMC.

In­vestors have turned risk averse ahead of the out­come of the state elec­tions in Ra­jasthan, Mad­hya Pradesh, Mi­zo­ram, Te­lan­gana and Ch­hat­tis­garh on De­cem­ber 11.

Emailed queries to spokesper­sons of Lone Star and I Squared Cap­i­tal did not elicit any re­sponse. IL&FS and Ac­tis spokesper­sons de­clined to com­ment on the mat­ter. A spokesper­son for CPPIB de­clined to com­ment on mar­ket ru­mours and spec­u­la­tion.

“Even though the wind and so­lar as­sets of IL&FS are in key lo­ca­tions and the power pur­chase agree­ments with state elec­tric­ity providers are in place, the debt pile re­mains a con­cern and hence the eq­uity value has been wiped out,” said an­other per­son with knowl­edge of the de­vel­op­ment. Se­quen­tial rat­ing down­grades of the firm led to ero­sion in the eq­uity value of its as­sets.

The as­sets will be sold on an in­di­vid­ual ba­sis, depending on lo­ca­tion, ca­pac­ity gen­er­a­tion and long-term vi­a­bil­ity.

“Cur­rently, the in­vestors have in­di­cated that they would pur­chase spe­cific as­sets and are not in­ter­ested in a bun­dled deal,” the third per­son in­volved in the deal said.

The board ap­pointed Ra­jeev Gupta-led Ar­p­wood Cap­i­tal and JM Fi­nan­cial as fi­nan­cial ad­vis­ers to help mon­e­tise the as­sets. Global con­sult­ing group Al­varez & Marsal is also help­ing the group.

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