Border tensions spook investors, markets plunge (Market Review)

Mumbai, Oct 1 (IANS) Escalation of tension between India and Pakistan, coupled with negative global cues and derivatives expiry, plunged the Indian equity markets during the week ended Friday.

The 30-scrip sensitive index (Sensex) of the BSE closed the week’s trade with a substantial loss of 802.26 points or 2.8 per cent to 27,865.96 points.

Similarly, the 51-scrip Nifty of the National Stock Exchange (NSE) receded by 220.4 points or 2.5 per cent to 8,611.15 points.

The benchmark indices began the trading week on a lower note on the back of negative global cues and caution ahead of F&O (futures and options) expiry.

“Last week saw cross-border tensions sparking volatility and a long liquidation spree, but its momentum was blunted amidst F&O (futures and options) expiry,” Anand James, Chief Market Strategist at Geojit BNP Paribas Financial Services, told IANS.

The key Indian equity indices took a sharp fall on Thursday afternoon after the Indian Army said it had carried out surgical strikes on terror launch pads across the Line of Control (LoC) in Jammu and Kashmir, inflicting “significant casualties”.

“Global cues were on the weaker side as European markets were bogged down by Deutsche Bank’s penalty worries, which also meant that OPEC’s decision to cut production and the consequent rise in oil prices had limited impact on equities,” James said.

The global markets, especially European and Asian indices, remained largely mixed due to the OPEC meet in Algeria and comments from the US Federal Reserve and the European Central Bank (ECB).

According to D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors, the global markets were mixed in the week gone by after investors were reassured by trade-friendly Hillary Clinton’s performance in a US presidential debate against Donald Trump.

“Bulls got further stimulated after a report showed consumer confidence in the US rose to its strongest in nine years in September. However, anxiety about the future of Deutsche Bank caused nervousness among the market participants,” Aggarwal said.

Sentiments also remained subdued with the World Trade Organization’s (WTO) estimates showing that world trade will grow more slowly than expected in 2016, expanding by just 1.7 per cent, well below the April forecast of 2.8 per cent.

“The forecast for 2017 has also been revised, with trade now expected to grow between 1.8 per cent and 3.1 per cent, down from 3.6 per cent previously,” Dhruv Desai, Director and Chief Operating Officer of Tradebulls, said.

Even the Indian rupee had tumbled to its lowest level in a week after the announcement of the surgical strikes, when it depreciated to low of 66.95-96 to a dollar.

However on Friday, the rupee recovered and strengthened by four paise to 66.62 from its previous close of 66.66 last week.

Moreover, heavy selling pressure and profit booking at higher levels prompted the markets to trade with bearish sentiments during the week.

Nevertheless, the market sentiments were slightly buoyed by short covering and value buying at lower levels.

In addition, higher crude oil prices and healthy inflow of foreign funds helped the indices to pare some of their losses.

“Overall, foreign fund inflow was seen in the market even though the market witnessed some correction, which indicates recovery may come in Indian markets from lower levels,” Desai added.

“Most sector stocks witnessed profit booking at higher levels from traders in the last week.”

Provisional figures from the stock exchanges showed that the week witnessed an appreciable inflow of Rs 2,096.73 crore in foreign funds.

Figures from the National Securities Depository (NSDL) disclosed that foreign portfolio investors (FPIs) were net buyers of equities worth Rs 10,683.63 crore, or $1.60 billion from September 26-30.

Among the individual Sensex stocks, Tata Consultancy Services (TCS) was the top gainer (up 1.25 per cent at Rs 2,427.20), followed by Tata Steel (up 0.67 per cent at Rs 374.40), and Power Grid (up 0.31 per cent at Rs 176.35).

The losers were led by ICICI Bank (down 7.17 per cent at Rs 252.30), Adani Ports (down 6.72 per cent at Rs 256.75), NTPC (down 5.32 per cent at Rs 148.55), Cipla (down 5.06 per cent at Rs 580.25) and ITC (down 4.85 per cent at Rs 241.55).

(Porisma P. Gogoi can be contacted at porisma.g@ians.in)

–IANS

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