Double blow to stocks
Mumbai: Fears of a global trade war following the exit of a key White House economic adviser and the widening of investigations into the Rs 12,700-crore bank scam back home spooked investors on Wednesday, causing the benchmark Sensex to crack over 284 points.
Moreover, political developments at the Centre that saw the ruling NDA's ally TDP threatening to quit the government hurt sentiment.
Stocks came under pressure, reflecting their Asian and European counterparts, after White House's top economic adviser Gary Cohn resigned reportedly over differences with US President Donald Trump on trade policy and protectionism. The resignation led to fears that the US President may go ahead with a proposed move to impose higher tariffs on metals that could lead to a global trade war.
Domestic developments, too, did not offer any support to the equities.
Agencies, including the Serious Fraud Investigation Office (SFIO), widened the investigation into the alleged scam at Punjab National Bank (PNB). On Tuesday, the top officials of Axis Bank and ICICI Bank had appeared before the agency. On Wednesday, the SFIO questioned PNB managing director and CEO Sunil Mehta.
Heads or senior officials of other banks which have provided funds to the Nirav Modi and Mehul Choksi group firms may also be questioned in the days to come.
The 30-share Sensex, which opened marginally lower at 33279.39 and dropped to an intra-day low of 32991.14, closed at 33033.09 - a fall of 284.11 points, or 0.85 per cent. Barring eight stocks in this pack, the rest ended in the negative territory. This is the lowest closing for the index since December 7 when it had ended at 32949.20.<>
As the probe gathered steam, banking stocks continued to face the heat. Shares of the SBI, PNB, ICICI Bank, BoB, Yes Bank, Axis Bank, HDFC Bank and IndusInd suffered losses of up to 3.84 per cent.
On the BSE, the S&P BSE Bankex dropped 1.38 per cent.
All sectoral indices, barring FMCG and consumer durables, ended in the red.
The guage has now lost 1412.66 points in six sessions.
The broader NSE Nifty dipped below the 10200-mark to finish at 10154.20, down by 95.05 points, or 0.93 per cent.
"Weak global cues because of escalating trade war concerns and widening probe into PSU banks led the domestic market to under-perform. From the recent high, the market declined by 9 per cent as investor sentiment got hurt by domestic and global headwinds. Consolidation in bond yield and ease in global market volatility is likely to provide some leeway to the current negative sentiment," Vinod Nair, head of research, Geojit Financial Services said.
In the Asian region, Japan's Nikkei shed 0.77 per cent, while Hong Kong's Hang Seng fell 1.03 per cent and Shanghai Composite Index ended lower by 0.55 per cent.