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India’s stock market indices fell 1.65 per cent on Tuesday as a tide of bearish sentiment swept financial markets around the world due to the raging turmoil in Hong Kong.
The Sensex fell 623 points while the Nifty was down 183 points.
There was hope that the markets would witness a rally today when they opened for trading, as Mukesh Ambani had announced on Monday that Saudi Aramco, the world’s largest oil company, would pick up a 20 per cent stake in RIL’s oil-to-chemicals division for about $15 billion.
The RIL stock, which enjoys the largest weightage in the Sensex and Nifty, rallied 10 per cent on the news. Though it cut the Sensex’s loss by 360 points, it could not fully prevent the bloodbath.
Wednesday may not see a repeat of Tuesday’s turmoil as opening trade in the US stock markets flipped the sentiments to positive territory. This was on the back of news that the US would delay some tariffs against China.
The Dow Jones index saw a 400-point rally minutes after opening on Tuesday, which will have an impact on the sentiments in India on Wednesday. All the three key indices in the US — Nasdaq, Dow Jones and S&P — rallied between 1.25 and 2 per cent on opening.
“There were reports of a military build-up by China along the border it shares with Hong Kong. China is accusing the US of fuelling Hong Kong protests and the scene may get murky if China invades Hong Kong. It could shatter global trade and spark a further rally in risk assets like gold, which is causing a market fall currently,” said the head of research at a foreign brokerage.
The fund manager said that despite the US stock rally, the market is convinced that a trade deal is far from being struck. Tuesday was also a bad day for markets as Argentina’s bourse crashed 40 per cent in a single day and its currency, too, fell 15 per cent after President Mauricio Macri was routed in an election primary.
Gold, rupee plunge
Gold prices fell by nearly ₹800 after touching a high of ₹38,658 earlier this week.
The rupee plunged 62 paise to close at a nearly six-month low of 71.40 against the US dollar in line with battered equities.
In India, all eyes are on Finance Minister Nirmala Sitharaman, who met top fund managers and businessmen last week and listened to requests for fillips for the corporate sector, and tax tweaks, experts said. “ In our view, the focus on monetary policy transmission, alongside steps to improve the business environment and reduce the sectoral regulatory burden... is more likely to be the policy response in the current phase of the cyclical slowdown,” said analysts at Nomura.
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