Indian stocks on Thursday managed to shield themselves to an extent from the global crash that started in the US on Wednesday and swept across the Asian markets as investor sentiment slumped on President Donald Trump’s comments against the Federal Reserve amid trade tensions and rising bond yields in the world’s largest economy.
The 30-share BSE Sensex cracked over 1000 points in early trade and even fell below 34000 before staging a partial recovery to end 2.19 per cent lower at 34001.15.
While the Sensex cracked 2.19 per cent and the broader Nifty by 2.16 per cent, Nikkei was down almost 4 per cent, Shanghai Composite index by over 5 per cent and South Korea’s Kospi index by 4.44 per cent.
Wall Street has also dropped on Thursday, raising concerns over the fate of Indian stocks on Friday.
The global sell-off was triggered after the Dow Jones slumped more than 800 points on Wednesday. It spread to Asia with India also falling prey to the selling spree. Investor wealth as measured by market capitalisation on the BSE eroded by Rs 2.69 lakh crore.
While the US Federal Reserve has indicated that more hikes are likely to come, yields have climbed to their highest in seven years, leading investors to wean away from equities to safe haven US treasuries.
For emerging markets such as India, which are already feeling the pinch of firm oil prices, continued trade tensions between the US and China have not been good either. President Donald Trump’s comments against its central bank further contributed to the bearish trend.
“I think the Fed is making a mistake (on raising rates). They are so tight. I think the Fed has gone crazy,’’ he said.
The BSE Sensex ended 759.74 points lower at 34001.15. This is the lowest closing since April 11. It had gained 461.42 points on Wednesday.
Similarly, the NSE Nifty settled at 10234.65, down 225.45 points, or 2.16 per cent. It moved between 10138.60 and 10335.95 during the day.
Barring three stocks in the 30-share index, the rest ended in the red. The SBI was the largest percentage loser as its shares slumped close to 6 per cent. It was followed by Tata Steel, Vedanta and Mahindra & Mahindra.
Market experts say while more correction could be in the offing, investors should wait for prices to stabilise before they resume buying.
“Market sell-off has now become international, with Dow Jones has also started its correction. The sell-off has turned out to be broad-based across the industries and categories. However, investors can keep the shopping-list ready as high quality companies with strong fundamentals tend to bottom-out ahead of Nifty. The top priority for investors should be preservation of capital and confidence,’’ Jagannadham Thunuguntla, head of research (wealth), Centrum Broking, said.
Among sectoral indices, the BSE metal index emerged the worst performer by falling 3.77 per cent. At the BSE, 1,765 scrips declined, while 819 advanced and 147 remained unchanged. Nearly 370 scrips hit their 52-week lows on the BSE.
