Sensex, Nifty slide to 3-week low as trade war fears grip global equities

Sun Pharma continued its slide and emerged as the worst performer among Sensex constituents by dipping 3.72 per cent.

Illustration: Uttam Ghosh/Rediff.com

Stock markets tanked more than 1 per cent to close at three-week low levels on Monday following a global slide in equities due to trade war concerns which also dragged the rupee to a record low of 72.67 in day trade.

The benchmark 30-share BSE Sensex closed at a three-week low of 37,922.17, down by 467.65 points or 1.22 per cent, which was its biggest single-day fall since March 16 when it lost 509.54 points.

The 50-share NSE Nifty also dropped below the 11,500-level by plunging 151 points or 1.30 per cent -- its biggest single-day fall since February 6 -- to close at 11,438.10, the lowest closing since August 16. Intra-day, it hit a low of 11,427.30.

Negative leads from global markets as investors turned cautious amid fears of a possible escalation in the US-China trade conflict hit the market sentiment.

"Markets slid as fears of escalating US -China trade war dented the confidence. As a direct impact of rising crude oil price, widened current account deficit and strengthening dollar on account of a strong US job data, rupee succumbed to a new low and 10-year yield rose further," Vinod Nair, Head of Research, Geojit Financial Services Ltd said.

US President Donald Trump on Friday threatened to slap tariffs on all Chinese imports, fanning fears of intensifying trade war between the two major economies and their ripple impact on emerging markets.

Beijing also warned of retaliation if the US goes ahead with any new measures.

Sentiment also took a blow after Moody's Investors Service said sustained weakening of the rupee is “credit negative” for Indian companies which generate revenue in rupees but rely on US dollar debt to fund their operations.

The Indian rupee has depreciated 13 per cent so far in 2018 and touched a historic low of Rs 72.67 to a dollar on Monday before a rebound on strong intervention of the Reserve Bank.

Surging crude oil prices globally too had a rub-off effect on Indian stocks and rupee, market analysts said.

Meanwhile, India's current account deficit (CAD) widened to $15.8 billion in April-June this year as against $15 billion in the same quarter of 2017-18 in value terms, mainly due to a higher trade deficit, according to RBI data released on Friday.

Sun Pharma continued its slide and emerged as the worst performer among Sensex constituents by dipping 3.72 per cent.

The stock witnessed heavy selling since Friday on reports that the USFDA had issued observations related to testing procedures at its Halol plant.

Mahindra & Mahindra was the second largest loser as it dropped 3.64 per cent.

HDFC Bank and HDFC declined by 2.54 per cent and 2.14 per cent while banking major SBI fell 2.35 per cent.

Energy major Reliance Industries declined by 1.54 per cent and Coal India by 1.96 per cent, dragging the index to three-week lows.

Other laggards were Vedanta Ltd, IndusInd Bank, Asian Paint, ONGC, Bajaj Auto, HUL, Kotak Bank, Adani Ports, Hero MotoCorp, PowerGrid, ITC Ltd, Maruti Suzuki, Bharti Airtel, Tata Steel, Tata Motors, L&T, ICICI Bank, NTPC and Infosys, falling up to 3.44 per cent.

In contrast, shares of Axis Bank surged 0.99 per cent after the private-sector lender appointed a new CEO and MD.

Wipro rose 0.26 per cent, while Yes Bank gained 0.09 per cent. TCS too up 0.07 per cent.

Among sectoral indices, the BSE auto fell the most at 1.75 per cent, followed by metal 1.74 per cent, energy 1.67 per cent, FMCG 1.65 per cent, oil&gas 1.59 per cent, realty 1.51 per cent, healthcare 1.50 per cent, finance 1.50, PSU 1.45 per cent, power 1.32 per cent, utilities 1.28 per cent, infrastructure 1.32 per cent, bankex 1.02 per cent, consumer durables 1.02 per cent and capital goods 0.97 per cent.

IT index ended in the green, rising 0.02 per cent.

Broader markets too faced selling pressure in line with the overall trend with the BSE mid-cap index falling 1.68 per cent and small-cap declining 1.07 per cent.

In the global markets, Asian equities were weak. Hong Kong's Hang Seng closed 1.30 per cent, while China's Shanghai Composite Index fell 0.98 per cent. Japan's Nikkei, however, edged up 0.31 per cent.

European indices too were trading lower in their late morning session amid ongoing concerns over global trade. Paris CAC 40 shed 0.07 per cent, while Frankfurt's DAX slipped 0.12 per cent. London's FTSE too edged lower by 0.1 per cent.