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Prospects of trade wars weigh heavy on equity markets

Prospects of trade wars weigh heavy on equity markets

Mumbai: Negative global cues on the prospect of trade wars and protectionism pulled the key indices of the Indian equity market lower on Monday.

According to market observers, heavy selling pressure was witnessed in metals, oil and gas, auto, capital goods and banking stocks.

Consequently, the barometer 30-scrip Sensitive Index (Sensex) of the BSE closed the day’s trade at 33,746.78 points — down 300.16 points, or 0.88 per cent, from its previous close of 34,046.94 points.

Similarly, the wider Nifty50 of the National Stock Exchange (NSE) edged-lower on Monday. It closed lower by 99.50 points, or 0.95 per cent, to close at 10,358.85 points.

“Markets corrected further on Monday falling for the fourth straight session. Private survey data which showed deterioration in India’s services sector activity last month hit investor sentiments. Also fears that US President Donald Trump’s announced tariffs on steel and aluminium could spark a trade war led to sharp falls in Metal and Mining stocks,” said Deepak Jasani, Head – Retail Research, HDFC Securities.

“Weakness in Asian stock markets as investors digested the latest growth forecast for China (6.5 per cent for 2018, same as in 2017) also affected sentiments. Nifty finally closed 0.95 per cent lower at 10,359 points.”

As per Anand James, Chief Market Strategist, Geojit Financial Services: “Domestic market succumbed to the pressure exerted by global peers, concerned over talks over likely hike in US import tariff on steel and aluminium.”

“Metal sector has taken the biggest hit so far, but Indian exporters would look at the dawning possibility of a of a global trade war, adding to the anxiety of the investors awaiting outcomes of major Central banks meetings this week. Heavy FII outflow during February and the persistent NPA issues in the banking sector also continuous to worry the domestic investors.”

On the currency front, the Indian rupee stregthened to close at 65.11 against the US dollar from its previous close at 65.17-18.

In terms of investments, provisional data with the exchanges showed that foreign institutional investors sold scrip worth Rs 366.60 crore, while domestic institutional investors off-loaded stocks worth Rs 154.20 crore.

“Sectorally, top gainers were IT and PSU Bank indices. Top losers were Metal, Auto, FMCG and Realty indices. Stockwise, BEML, Mindtree, IDBI and Tech Mah have moved higher while Balrampur Chini, NMDC, Nalco and Tata Motors have moved lower,” Jasani said.

Sector-wise, S&P BSE metals index receded by 495.82 points, automobile index by 385.15 points, oil and gas index by 281.45 points, capital goods index by 187.42 points and FMCG index by 130.74 points.

However, IT and ITES index remained in the green.

Major Sensex gainers on Monday were: Sun Pharma, up 2.50 per cent at Rs 547.85; Tata Consultancy Services (TCS), up 2.21 per cent at Rs 3,104.30; Mahindra and Mahindra, up 0.81 per cent at Rs 738.95, State Bank of India, up 0.48 per cent at Rs 263.80 and Kotak Bank, up 0.25 per cent at Rs 1,098.90.

The Sensex losers were: Tata Motors, down 5.04 per cent at Rs 325.15; Tata Motors (DVR), down 3.92 per cent at Rs 199.70; Tata Steel, down 2.95 per cent at Rs 655.35; Bajaj Auto, down 2.74 per cent at Rs 2,942.10; and Reliance Industries, down 2.48 per cent at Rs 924.20.

IANS