Markets slide on global sentiment, local politics
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MUMBAI: Local political uncertainty, a string of share sales and weak sentiment
in global equities dragged down India’s stock markets on Friday with benchmark
indices posting their biggest single-day fall since February 2.
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Domestic investors trimmed equity holdings ahead of March 31, when the zero-taxation regime for long-term capital gains from equities ends.
The Sensex declined 509.54 points, or 1.51 per cent, to
close at 33,176. The Nifty dropped 165 points, or 1.59 per cent, to close at
10,195.15. Out of 30 Sensex stocks, 26 ended weak while four ended higher. The
Volatility Index, or VIX, soared 6.2 per cent, suggesting traders expect risks
to the market to remain in the near-term.
While concerns for the market so far have mostly emanated
from the US, investors are beginning to worry about the changes in the domestic
political equations. The exit of Telugu Desam Party (TDP), a key ally of the
BJP in the National Democratic Alliance, coupled with BJP’s defeat in the UP
bypolls, has shaken the confidence of market participants.
“Domestic politics is seeing some uncertain moments which is making investors nervous,” said Mahesh Patil, chief investment officer — equities, Birla Sun Life Mutual Fund. “There is also a constant supply of paper that’s taking away the liquidity and uncertainty about the public sector banks.”
The rush of initial public offers (IPO) in March worth at least Rs 15,000 crore from companies such as ICICI Securities and Bandhan among others before the financial year ends on March 31, is draining away a portion of the money from the secondary market. Brokers said some of the companies are looking to complete the IPO before March 31 to buck the long-term capital gains tax applicable from April 1. Many individual investors too are selling a portion of shares and equity mutual funds before the ..
“Domestic politics is seeing some uncertain moments which is making investors nervous,” said Mahesh Patil, chief investment officer — equities, Birla Sun Life Mutual Fund. “There is also a constant supply of paper that’s taking away the liquidity and uncertainty about the public sector banks.”
The rush of initial public offers (IPO) in March worth at least Rs 15,000 crore from companies such as ICICI Securities and Bandhan among others before the financial year ends on March 31, is draining away a portion of the money from the secondary market. Brokers said some of the companies are looking to complete the IPO before March 31 to buck the long-term capital gains tax applicable from April 1. Many individual investors too are selling a portion of shares and equity mutual funds before the ..
Domestic institutions including mutual funds and insurers
were sellers of Rs 770.5 crore on Friday, according to provisional data.
Focus on Federal Reserve meeting next week
Their foreign counterparts sold shares worth Rs 150 crore.
The broader market too ended weak but the losses were lower compared to bluechips. The midand small-cap indices were down roughly 1 per cent. Losers outnumbered gainers 1,835: 859 on the BSE.
Elsewhere in Asia, markets ended weak as continued political chaos in the US added to existing concerns over the country’s trade war.
The latest trigger for uncertainty were reports that special counsel Robert Mueller, tasked to investigate meddling by Russian intelligence agencies in the 2016 US probe, is investigating documents related to Donald Trump’s businesses.
Earlier this week, Trump’s top economic adviser Gary Cohn resigned after the country sought to impose tariffs on steel and alluminium imports. The move spooked investors, who are worried that the US is leaning towards protectionism.
Next week, the focus is likely to be on the US Federal Reserve, which will be holding its first rate-setting meeting under the new chairman Jerome Powell.
The American central bank is expected to raise a key policy rate by 0.25 per cent at its March 20 -21 meeting. Investors will watch out for Fed’s remarks on inflation and the job market for clues on direction of interest rates.
Focus on Federal Reserve meeting next week
Their foreign counterparts sold shares worth Rs 150 crore.
The broader market too ended weak but the losses were lower compared to bluechips. The midand small-cap indices were down roughly 1 per cent. Losers outnumbered gainers 1,835: 859 on the BSE.
Elsewhere in Asia, markets ended weak as continued political chaos in the US added to existing concerns over the country’s trade war.
The latest trigger for uncertainty were reports that special counsel Robert Mueller, tasked to investigate meddling by Russian intelligence agencies in the 2016 US probe, is investigating documents related to Donald Trump’s businesses.
Earlier this week, Trump’s top economic adviser Gary Cohn resigned after the country sought to impose tariffs on steel and alluminium imports. The move spooked investors, who are worried that the US is leaning towards protectionism.
Next week, the focus is likely to be on the US Federal Reserve, which will be holding its first rate-setting meeting under the new chairman Jerome Powell.
The American central bank is expected to raise a key policy rate by 0.25 per cent at its March 20 -21 meeting. Investors will watch out for Fed’s remarks on inflation and the job market for clues on direction of interest rates.
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