Election Anxiety, US-China Tension Pull Stocks Down
Fear of mixed outcome in poll results, global factors have turned investors risk averse
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.