Markets

Equities plunge amid global sell-off over West Asia fears

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HDFC, RIL and SBI among key losers in Sensex pack; rupee drops 13 paise

Indian equities lost heavy ground on Monday amid a global sell-off as investors turned jittery due to increasing geopolitical tension in the West Asia region which threatens to push up international price of crude, of which India is one of the biggest importers globally.

The 30-share Sensex lost 787.98 points, or 1.90%, to close at 40,676.63.

As many as 28 constituents of the index ended the day in red, with stocks such as HDFC, HDFC Bank, Reliance Industries, ICICI Bank, State Bank of India and Tata Steel among others shedding more than 2% each on Monday.

1,900 stocks lose

On a broader level, more than 1,900 stocks lost ground on BSE, while less than 600 stocks managed to end on a positive note.

The broader Nifty fell below the psychological 12,000-mark to close at 11,993.05, down 233.60 points or 1.91%. The India VIX index, which is looked upon as a barometer of near-term volatility, jumped over 16% on Monday.

Meanwhile, the rupee plunged 13 paise to close at 71.93 against the U.S. dollar on Monday — the third straight session of losses during which it has cumulatively lost 71 paise.

The rupee touched a low of 72.11 on Monday.

The fall in the Indian equity markets was in line with most other markets, as Nikkei lost nearly 2%, while Hang Seng was down nearly 0.80%. Further, most of the European markets opened more than 1% lower on Monday.

‘Oil on peak’

“Global equity markets are under pressure as a flare-up of tensions in the Middle East sent gold to its highest in almost seven years and oil near its 4-month peak,” said Prasanna Pathak, fund manager, Taurus Mutual Fund.

“If brent crude sustains above $70 per barrel, fiscal deficit concern will again arise. Government could get restricted in its spending which could limit economic growth in medium term, while the Reserve Bankof India would be constrained in cutting interest rates,” Mr. Pathak added.

Brent crude prices touched nearly $71 per barrel during the day, while gold moved beyond $1,590 an ounce on Monday.

“Escalating tensions may dent market risk appetite and weigh down on risker assets like global equity markets and commodities like base metals,” said Ravindra Rao, head — Commodity Research, Kotak Securities.

“However, it may continue to lend support to safe havens like gold and silver and will also be supportive of crude oil prices amid worries over supply disruption from the region,” Mr. Rao added.

Incidentally, foreign portfolio investors (FPIs), who were major buyers of Indian shares in 2019, were net sellers on Monday at a little over ₹100 crore.

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Printable version | Jan 21, 2020 5:25:49 AM | https://www.thehindu.com/business/markets/equities-plunge-amid-global-sell-off-over-west-asia-fears/article30496431.ece

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