The escalating trade war between the US and China led to a global sell-off in the equity markets on Friday with the Indian benchmark indices falling to their five-month lows. Incidentally, the broader Nifty fell below the psychological 10,000-mark for the first time since October 11, 2017.
The 30-share Sensex opened the day 356 points lower at 32650.89, before falling further to touch a low of 32,483.84 – a fall of 522 points. It finally ended the day at 32,596.54, down 409.73 points or 1.24%.
The selling was witnessed across the board with 2,149 stocks losing ground on BSE, as against only 558 gainers. Further, almost all the sectoral indices also ended the day in the red with those representing metal, real estate and banking shedding over 2% each.
The broader Nifty of the National Stock Exchange (NSE) lost 116.70 points or 1.15% to close at 9,998.05. This was the first time since October 11, 2017 when the 50-share barometer closed below the 10,000 mark.
Elsewhere in Asia, Nikkei lost nearly 1,000 points or 4.51% while Hang Seng was down 767 points or 2.45. The overnight Dow Jones was also down 724 points or nearly 3%.
“The trade war between the US and China threatened to precipitate after Donald Trump announced a series of trade tariffs on Chinese imports,” said Mayuresh Joshi, Fund Manager, Angel Broking.
“This trade war is expected to trigger a slowdown in industrial investments and also in output. That is what is putting pressure on world markets. If the Nifty cracking below the 10,000 mark is any indication, then the Indian markets are surely sufficiently worried,” he added.
Incidentally, China has said that it has identified around 128 US products that could face trade sanctions with reports suggesting that such imports collectively account for $3 billion worth of trade.
The statement from China came after US President Donald Trump directed the US trade representative to level tariffs on Chinese imports worth $50 billion.
Meanwhile, the Sensex pack saw 24 of the 30 stocks ending in the red with banking majors State Bank of India (SBI), Axis Bank, ICICI Bank and Yes Bank among the top losers shedding 2-4% each.
Interestingly, the fall in the broader market has come at a time when foreign investors have been net buyers of Indian shares. In March, they have bought shares worth Rs.8440 crore, after remaining net sellers in February at Rs.11,037 crore.
“Earlier we were struggling with our own issues and now pressure from the global front has worsened the situation. Besides, the breakdown of major psychological support at 10,000 will further add to the worries. Traders have no option but to stay with the trend and use bounce to create fresh shorts. Nifty has next support at 9,900,” said Jayant Manglik, President, Religare Broking.
