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Black Friday: Sensex plunges over 1,000 points over Brexit


Mumbai:The BSE Sensex closed well off day’s lows after the benchmark index slumped nearly 1,100 points, tracking a selloff in global markets after Britain voted to exit the European Union. The rupee crashing by 96 paise, but late buying by domestic institutions and talking-up by policymakers helped them recoup some losses.

The BSE Sensex still ended the day 605 points lower, its biggest single-day fall in over four months, while the rupee closed 71 paise down at 67.96 against the US dollar, its lowest level in four months.

Consequently, total investor wealth, measured in terms of cumulative market value of all listed stocks, tanked nearly Rs 1.79 lakh crore.

Domestic stocks, which had plunged 1,100 points in early trade, recouped some of the losses on value-buying and reassuring words by policymakers, including Finance Minister Arun Jaitley and RBI Governor Raghuram Rajan.

In what was termed as ‘readjustment across all asset classes’ by Rajan, gold prices went up with the yellow metal again emerging as a ‘safe haven’ investment.

“Brexit has come as a shocker to markets who were expecting Britain to remain in the EU. There was mayhem in global markets as the news trickled in, though some semblance of normalcy came in the final hour of trading,” said Hariprasad M P, Senior Vice-President & Head Treasury & Banknotes Business, Centrum Direct.

In a deadly blow to the 28-nation bloc, Britain today voted to leave the EU, forcing Prime Minister David Cameron to announce resignation in the wake of defeat in the referendum whose result triggered a panic reaction in world markets.

Japan’s Nikkei tumbled 7.92 per cent while Hong Kong’s Hang Seng fell 2.92 per cent. Europe was also in deep red with London-based FTSE index down 9 per cent at one point.

The pound collapsed to a 31-year low against the dollar after crashing 10 per cent while compared to the rupee, British currency fell around Rs 7 to 93.13.

After opening lower at 26,367.48, the BSE Sensex continued to slide, hit by plunging global markets, forcing the index to crack the 26,000-mark and touch a low of 25,911.33.

However, value-buying in key bluechips, helped the index recover part of the lost ground to close the session 604.51 points or 2.24 per cent down at 26,397.71. This was the index’s weakest closing since February 11.

The NSE Nifty, which cracked below the 8,000-level, managed to recover part of the initial losses and settled 181.85 points or 2.20 per cent down at 8,088.60.

Tata Group stocks were among the biggest fallers, plunging up to 8 per cent, as Brexit spooked investors given the conglomerate’s huge exposure to the region.

Tata Group’s bluechips, Tata Motors slumped 7.99 per cent, Tata Steel plunged 6.37 per cent and TCS slipped 2.78 per cent on BSE. Tata Motors and Tata Steel were the worst performers among the 30-Sensex stocks.

Concerns mounted as commentators said Britain’s exit, commonly referred to as Brexit, would mean that the EU could slip into recession while Indian companies would also need to rework their strategy to use UK as a gateway for their European operations.

From the IT pack, Tech Mahindra lost 4.74 per cent, Wipro 1.52 per cent and Infosys 1.41 per cent.
The fall was so widespread that 23 Sensex stocks closed in the red including L&T, ICICI Bank, ONGC, RIL, Axis Bank, SBI, TCS and Adani Ports, crashing by up to 7.99 per cent.

However, Bajaj Auto rose 1.05 per cent followed by Asian Paints 0.48 per cent, GAIL 0.33 per cent, Sun Pharma 0.27 per cent and M&M 0.19 per cent.

In commodities market, gold prices zoomed to a 26-month high of Rs 30,885 in its biggest single-day gain of Rs 1,215 since August 2013. It was gold’s highest closing level since April 28, 2014, at Rs 30,730 in the Delhi’s bullion market.

Silver also registered a steep rise of Rs 1,000 to Rs 42,300 per kg, largely in tandem with global trend.

Meanwhile, Seeking to calm turbulent markets, government and RBI today said India’s sound macroeconomic fundamentals backed by planned structural reforms and firewalls will help it weather any major fallout of UK’s leaving the EU.

Jaitley said impact on markets should not last beyond a few days and vowed to steadfastly pursue growth-oriented reforms agenda including early passage of GST Bill, while Rajan promised to provide liquidity and correct any disorderly market behaviour.

“We expect short-term volatility. Developments in the UK will have a definite impact on global markets in the short to medium term. However, a positive outlook is foreseen for the Indian markets over a long term basis owing to strong macroeconomic fundamentals,” said Market rundown by Gaurang Shah, Vice President, Geojit BNP Paribas.

In broader markets, mid-cap and small-cap indices fell by 1.07 per cent and 1.46 per cent, respectively.

Among BSE sectoral indices, realty fell 3.74 per cent, industrial 3.62 per cent, metal 3.59 per cent, capital goods 3.30 per cent, bankex 2.69 per cent, auto 2.63 per cent, energy 2.51 per cent, finance 2.24 per cent and IT 2.13 per cent.

The market breadth remained negative as 1,829 stocks ended lower, 693 closed higher while 158 ruled steady. Total turnover rose to Rs 3,968.19 crore from Rs 2,283.98 crore yesterday.


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