Market catches global flu, Sensex cracks 572 points

NEW DELHI: Domestic equities came under strain on Thursday, mirroring Asian weakness after the arrest of a top executive of Chinese technology giant Huawei.

The arrest, which came at the request of the US, triggered a big selloff in Asian shares as fresh worries surrounding global trade war resurfaced.

A lacklustre rupee brought more pain. The local currency broke below the 71-mark and hit an intraday low level of 71.14 against the dollar.

What spoiled mood further was action of rating agency Fitch, which cut India’s FY21 GDP growth forecast to 7.1 per cent from 7.3 per cent. It also sees the rupee weakening to 75 by the end of 2019. The global rating firm cut India growth estimates on reduced credit availability and higher financing costs.

Over a 3 per cent fall in crude prices did little to buoy sentiment. But investors are tracking oil prices with keen interest ahead of the crucial Opec decision on any production cut.

The BSE Sensex settled at 35,312, down 572 points or 1.59 per cent, with only Sun Pharma holding out. Maruti Suzuki, Tata Motors, YES Bank, Reliance Industries and Adani Ports struggled most and shed up to 4.89 per cent.

The 50-share Nifty closed the day lower by 182 points, or 1.69 per cent, at 10,601, with only four scrips in the green.

It was the third straight day of losses for both Sensex and Nifty. BSE's market cap declined by Rs 3.71 lakh crore on Thursday.

Auto, IT, realty and PSU Bank stocks saw heavy selling pressure. Nifty Realty ended down 2.40 per cent, with Auto and IT sliding up to 2.24 per cent.

Banking stocks felt the squeeze after the Reserve Bank of India (RBI) said it would link retail loans to external benchmarks replacing MCLR. Nifty PSU Bank index closed down 1.86 per cent, with all of its 12 stocks registering losses.

All sectors on the BSE ran up losses, with oil and gas 1.70 per cent down ahead of the Opec meet outcome, which is due tomorrow.

BSE Midcap and Smallcap indices fell in line with the Sensex, losing 1.54 per cent and 1.36 per cent, respectively.

Globally, European shares fell after the top executive's arrest fuelled new worries over the Sino-US trade war, hitting export-oriented technology and auto stocks. By 0933 GMT, the pan-regional STOXX 600 index had fallen 1.8 per cent to its lowest level since December 2016, according to a Reuters report.


Expert-take

Vinod Nair, Head of Research, Geojit Financial Services
Global markets are in a risk–off mode due to fresh flare-up of tensions between China and US. Oil prices are inching up on expectation of production cuts by Russia and Opec, weakening the rupee further. The sell-off was broad based, while IT and auto are the worst hit. Investors are in wait and watch mode on account of evolving global macro headwinds and state elections.

Jagannadham Thunuguntla, Senior V-P and Head of Research (Wealth), Centrum Broking
Capital markets had a rough day, as they are trying to navigate too many data points such as re-emergence of sharp weakness in Indian rupee, upcoming Opec meeting outcome in terms of production cut, and upcoming results of 5 state assembly elections. The nervousness is quite evident as there is sharp sell–off across the industries, and especially in those stocks where there are corporate governance concerns. We feel investors should be ready with shopping-list of stock ideas as markets can surprise on upside if macros stabilise, and election results come out palatable to markets.