Business

Sensex tumbles on global, domestic cues

J&K turmoil also roils markets

Equities lost heavily on Monday as investors remained jittery amid negative global trend, weak corporate earnings and the government’s decision to scrap special status for Jammu and Kashmir and bifurcate the State.

The decision on making J&K an union territory could lead to further political tensions, according to market participants.

The 30-share Sensex lost 418.38 points, or 1.13%, to close at 36,699.84. Earlier in the day, it lost more than 700 points to touch a low of 36,416.79. As many as 21 Sensex constituents lost ground with Kotak Mahindra Bank, Reliance Industries, Power Grid Corporation, Tata Motors and Yes Bank shedding between 3% and 9% each.

The broader Nifty lost 134.75 points or 1.23% to close at 10,862.60. Further, India VIX index, which is looked upon as a barometer of near-term volatility, surged almost 15% during the morning session, before closing with a gain of a little more than 9%. The global sell-off on account of escalating U.S.-China trade war dented investors’ confidence on Monday.

China imbroglio

With China suspending all agricultural imports from the U.S. and Yuan dropping to below 7 a dollar, there was major panic.

The news that the government had decided to scrap Article 370 granting special status to J&K while bifurcating the State also acted as a catalyst with market players of the view that the ensuing political turmoil could lead to heightened volatility.

“The Indian markets started the week on a negative note led by ongoing tensions in Kashmir and unsupportive global cues,” said Ajit Mishra, vice-president — research, Religare Broking.

“Further, the ongoing turmoil in Kashmir may induce volatility in the markets. On the global front, escalating trade tensions between U.S. and China will keep the market participants on the edge and cause volatility in oil prices as well as currency,” added Mr. Mishra. Meanwhile, provisional numbers showed that foreign investors were net sellers at ₹2,017 crore on Monday. Interestingly, market players feel that foreign investors could accelerate their selling if political tensions flare up in the country on account of the J&K development.

Elsewhere in Asia, indices such as Hang Seng, Kospi and Jakarta Composite all closed with a loss of over 2% over concerns emanating from the ongoing U.S.-China trade war with reports suggesting that China had asked State-owned entities to halt imports from the U.S.

Back home, over 1,700 stocks lost ground on BSE, against less than 700 gainers.

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Printable version | May 30, 2020 3:08:24 PM | https://www.thehindu.com/business/sensex-tumbles-on-global-domestic-cues/article28826997.ece

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