Markets pare losses: Sensex ends 561 pts lower, Nifty fails to hold 10,500

All that happened in the markets today

SI Reporter | New Delhi Last Updated at February 6, 2018 15:51 IST

Photo: Shutterstock.com

Top sectoral loser: Nifty IT Sectoral Trend Sensex heatmap Markets at close Benchmark indices pared some losses after sliding more than 3% and the rupee weakened as a global market rout whacked sentiment, adding to existing investor concerns ahead of a central bank meeting this week and a new capital gains tax later in the year. The S&P BSE Sensex ended at 34,195, down 561 points while the broader Nifty50 index settled at 10,498, down 168 points. RBI in a fix, market eyes rate hike amid confidence crisis The Reserve Bank of India’s job as the government’s debt manager just got harder after the federal budget unveiled a near-record $95 billion borrowing plan in the coming fiscal year. Governor Urjit Patel needs to keep interest rates low to ensure Prime Minister Narendra Modi can bridge a widening fiscal deficit. But he also needs to bring down an inflation rate that breached the 4 per cent midpoint of the target band late last year, and which is expected to climb as the government increases spending before a general election next year. READ MORE RBI to turn hawkish, keep rates on hold through middle of 2019: Poll The Reserve Bank of India will keep interest rates on hold through at least the middle of 2019 even though inflation is above its medium-term target and is expected to stay that way, a Reuters poll found. A majority of economists also expect the central bank's tone to turn hawkish when it announces its latest policy decision on Wednesday. In the poll of 60 economists, taken after the Budget announcement, 58 said the RBI would keep key rates unchanged - the repo at 6.00 per cent and the reverse repo at 5.75 per cent - when it meets on Wednesday. The other two forecast an increase. READ MORE

The broader Nifty50 and the benchmark S&P BSE Sensex each fell as much as 3.7% in on Tuesday, the sixth consecutive session of falls, with both erasing their gains for the year. The S&P BSE Sensex ended at 34,195 levels, down 561 points while the broader Nifty50 index settled at 10,498, down 168 points.

The fall in the Indian benchmarks was triggered by a global rout led by US stocks that saw their biggest one-day fall in six years on Monday, as investor profit taking brought the market back down from record highs seen in late January, after benchmark bond yields rose to a four year high last week.

"The crash in the mother market - the Dow plunging by 2,200 points in two days - has unnerved equity markets globally. The sell off in the US has led to a global sell off," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Adding: "Indian market is performing in line with global markets in this down turn. That said, the valuations in India are are high, particularly in mid-and-small caps. This is not the time to make aggressive purchases, but to churn the portfolio in favour of quality stocks. Investors should not panic and stop SIPs."

GLOBAL PHENOMENON

The Dow Jones Industrial Average fell nearly 1,600 points for its biggest intraday drop in history in points terms, or more than 6 per cent, before ending down 1,175.21 points, or 4.6 per cent for its biggest one-day fall since August 2011.

The slump in Wall Street overnight comes as India’s record-setting share rally came under threat over the past few sessions following the government’s announcement of a 10% long-term capital gains tax in equities, which starts in April.

in other Asian markets, MSCI's broadest index of Asia-Pacific shares outside Japan slid 3.5 per cent to a one-month low, which would be its biggest fall in more than a year and a half, a day after it had fallen 1.6 per cent.

(With Reuters inputs)

CATCH ALL THE LIVE UPDATES

First Published: Tue, February 06 2018. 15:30 IST