Market crashes on Army's firefight with Naga insurgents alongside Myanmar border
ETMarkets.com|
Updated: Sep 27, 2017, 05.04 PM IST
NEW DELHI: The prevailing weak sentiment in the domestic equity market took a further hit on Wednesday after reports that Indian Army conducted a surgical strike alongside Indo-Myanmar border.
Reacting to the news, investors hit the panic button.
Domestic market extended its losing streak to the seventh straight session with BSE Sensex cracking 440 points and Nifty50 closing below 9,740 on Wednesday.
Sensex ended the day at nearly a 3-month low of 31,159.81, down 439.95 points or 1.39 per cent while the 50-share pack closed at 9,735.75, down 1.38 per cent or 136 points, hitting its one and a half month low level.
Shares of Adani Ports (down 4.52 per cent), Sun Pharma (down 3.03 per cent), SBI (down 2.99 per cent), Reliance (down 2.62 per cent) and ICICI Bank (down 2.41 per cent) were the top losers on BSE.
Broader markets extended losses and ended the session at 5-week low each. BSE Midcap plunged to 15,191.97 after shedding 308 points or 2 per cent with shares of Divi's Laboratories, PNB Housing Finance, Wockhardt Pharma, JSW Energy and Bharat Forge losing up to 11 per cent in trade.
Barring Nifty IT (down 0.04 per cent), all sectoral indices cracked over 1 per cent with Nifty PSU Bank index being the top sectoral loser.
Meanwhile, Nifty Bank index fell to its 2.5 month low level at 23,812.95, down 1.60 per cent.
Among specific stocks, Divi's Laboratories plunged 11.60 per cent to Rs 850.15 on BSE after its Vizag unit 2 received observations from the USFDA indicating violations of Food Drug and Cosmetic (FD&C) Act and related acts.
BSE Sensex hit the lowest intraday level since June 30.
The 7-day market sell-off has wiped off over Rs 6 lakh crore from investors’ wealth as market capitalisation of BSE-listed firms declined to Rs 130.68 lakh crore on Wednesday against Rs 136.76 lakh crore on September 18.
Here are top factors which spooked Dalal Street on Wednesday.
Surgical strike
Sudden fall was witnessed in the market after reports emerged that Indian Army conducted a surgical strike alongside Myanmar border against Naga terror outfit at 4.30 am on Wednesday.
“Major anti-terror operation by Indian Army along Myanmar border, terror group NSCN (K) faces heavy casualties,” Indian Army said in a tweet.
Crude oil prices hit 26-month high
Investors also turned cautious on a surge in crude oil prices globally. Data showed the Brent benchmark hovering around a 26-month high hit after US oil inventories unexpectedly declined as refiners raised output and amid threats from Turkey to cut crude exports from Iraq, Reuters reported.
Brent crude for November delivery was up 29 cents, or 0.5 per cent, at $58.73 a barre. It settled down 1 percent on Tuesday, after earlier hitting $59.49, its highest since July 2015 and more than 34 percent above its 2017 low, Reuters noted.
A rise in crude oil prices may stoke inflation and thus lowers RBI rate cut hopes. IT also dents pushes raw material prices and dents the corporate profitability.
Selling by FIIs
Foreign investors remained in exit mode as they have pulled out over Rs 5,500 crore from stock markets so far this month due to geopolitical concerns and a tendency to take profit. The net outflow by foreign portfolio investors (FPIs) follows withdrawal of Rs 12,770 crore from equities in August. Prior to that, they had pumped in over Rs 62,000 crore in the past six months.
Expectation of slow growth
Of late, OECD has slashed India's growth forecast for current fiscal to 6.7 per cent, down from 7.3 per cent estimated in June, citing transitory impact of GST rollout and demonetisation. In contrast, China's economy gets a 0.2 per cent lift from its earlier assessment to 6.8 per cent for 2017.
Weakness in rupee
The domestic currency has been on a falling spree. The domestic currency fell by 99 paise to day's low of 65.78 against the US dollar on Wednesday over Friday's closing of 64.79. The domestic currency was at 64 level at the beginning of this month. A weakening rupee lowers the FIIs' return on domestic equities.
"The Fed’s balance sheet reduction announcement and a likely strengthening of developed market DM monetary policy normalisation momentum in coming months should highlight the vulnerabilities of broad EM FX (including the Indian rupee and Indonesian Rupiah) to potential capital outflows," Nomura India said in a note.
Locally, the recent negative developments that supported our decision to reduce our long Rupee risk included weaker-than-expected GDP growth (released on 31 August) and a larger-than-forecast current account deficit for Q2 2017, it said.
Reacting to the news, investors hit the panic button.
Domestic market extended its losing streak to the seventh straight session with BSE Sensex cracking 440 points and Nifty50 closing below 9,740 on Wednesday.
Sensex ended the day at nearly a 3-month low of 31,159.81, down 439.95 points or 1.39 per cent while the 50-share pack closed at 9,735.75, down 1.38 per cent or 136 points, hitting its one and a half month low level.
Shares of Adani Ports (down 4.52 per cent), Sun Pharma (down 3.03 per cent), SBI (down 2.99 per cent), Reliance (down 2.62 per cent) and ICICI Bank (down 2.41 per cent) were the top losers on BSE.
Broader markets extended losses and ended the session at 5-week low each. BSE Midcap plunged to 15,191.97 after shedding 308 points or 2 per cent with shares of Divi's Laboratories, PNB Housing Finance, Wockhardt Pharma, JSW Energy and Bharat Forge losing up to 11 per cent in trade.
Barring Nifty IT (down 0.04 per cent), all sectoral indices cracked over 1 per cent with Nifty PSU Bank index being the top sectoral loser.
Meanwhile, Nifty Bank index fell to its 2.5 month low level at 23,812.95, down 1.60 per cent.
Among specific stocks, Divi's Laboratories plunged 11.60 per cent to Rs 850.15 on BSE after its Vizag unit 2 received observations from the USFDA indicating violations of Food Drug and Cosmetic (FD&C) Act and related acts.
BSE Sensex hit the lowest intraday level since June 30.
The 7-day market sell-off has wiped off over Rs 6 lakh crore from investors’ wealth as market capitalisation of BSE-listed firms declined to Rs 130.68 lakh crore on Wednesday against Rs 136.76 lakh crore on September 18.
Here are top factors which spooked Dalal Street on Wednesday.
Surgical strike
Sudden fall was witnessed in the market after reports emerged that Indian Army conducted a surgical strike alongside Myanmar border against Naga terror outfit at 4.30 am on Wednesday.
“Major anti-terror operation by Indian Army along Myanmar border, terror group NSCN (K) faces heavy casualties,” Indian Army said in a tweet.
Crude oil prices hit 26-month high
Investors also turned cautious on a surge in crude oil prices globally. Data showed the Brent benchmark hovering around a 26-month high hit after US oil inventories unexpectedly declined as refiners raised output and amid threats from Turkey to cut crude exports from Iraq, Reuters reported.
Brent crude for November delivery was up 29 cents, or 0.5 per cent, at $58.73 a barre. It settled down 1 percent on Tuesday, after earlier hitting $59.49, its highest since July 2015 and more than 34 percent above its 2017 low, Reuters noted.
A rise in crude oil prices may stoke inflation and thus lowers RBI rate cut hopes. IT also dents pushes raw material prices and dents the corporate profitability.
Selling by FIIs
Foreign investors remained in exit mode as they have pulled out over Rs 5,500 crore from stock markets so far this month due to geopolitical concerns and a tendency to take profit. The net outflow by foreign portfolio investors (FPIs) follows withdrawal of Rs 12,770 crore from equities in August. Prior to that, they had pumped in over Rs 62,000 crore in the past six months.
Expectation of slow growth
Of late, OECD has slashed India's growth forecast for current fiscal to 6.7 per cent, down from 7.3 per cent estimated in June, citing transitory impact of GST rollout and demonetisation. In contrast, China's economy gets a 0.2 per cent lift from its earlier assessment to 6.8 per cent for 2017.
Weakness in rupee
The domestic currency has been on a falling spree. The domestic currency fell by 99 paise to day's low of 65.78 against the US dollar on Wednesday over Friday's closing of 64.79. The domestic currency was at 64 level at the beginning of this month. A weakening rupee lowers the FIIs' return on domestic equities.
"The Fed’s balance sheet reduction announcement and a likely strengthening of developed market DM monetary policy normalisation momentum in coming months should highlight the vulnerabilities of broad EM FX (including the Indian rupee and Indonesian Rupiah) to potential capital outflows," Nomura India said in a note.
Locally, the recent negative developments that supported our decision to reduce our long Rupee risk included weaker-than-expected GDP growth (released on 31 August) and a larger-than-forecast current account deficit for Q2 2017, it said.
