Stock market plunge continues as Sensex tanks 418 points; Kashmir issue, other factors behind fall

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Published: August 5, 2019 5:03:16 PM

The headline indices Sensex and Nifty continued to remain under pressure on Monday amid weak global cues and political uncertainty over the Kashmir issue.

Over the last week, the Sensex lost 764.57 points or 2.01 per cent. (File photo)The Sensex ended 418 points to close at 36,699.84, while the Nifty closed above the 10,850-mark.

The headline indices Sensex and Nifty continued to remain under pressure on Monday amid weak global cues and political uncertainty over the Kashmir issue. The Sensex ended 418 points to close at 36,699.84, while the Nifty closed above the 10,850-mark. Intra-day the Sensex cracked 702 points to hit the day’s low at 36,416.79 but recovered losses after Home Minister Amit Shah moved a resolution to do away will all clauses of article 370 of the Constitution. The government on Monday abolished Article 370 that gave special status to Jammu and Kashmir and moved a separate bill to bifurcate the state into two separate union territories of Jammu and Kashmir, and Ladakh.

Also read: Monetary Policy preview: RBI could cut repo rate by 25 bps, Kotak CIO highlights key factors for growth

The Nifty traded below the 10,800-mark for the first time ever since February 28th, but recovered to settle at 10,862. Yes Bank (8.6% down), Powergrid (4.5% down), Tata Motors (5.25% down) were among the biggest losers in the Sensex pack. Bharti Airtel (4%), Tech Mahindra (2.15%), TCS (1.93%) were among the biggest gainers in the 30-share index. Amongst the sectoral indices, except IT and Telecom which ended with gains, all the other indices ended with losses wherein Banking, Consumer Durables and Realty were the top losers.

Taking stock of the reasons leading to today’s fall, technical analyst Milan Vaishnav noted that global factors were a major contributor. “Primarily the trade war tensions have led to China’s devaluing Yuan and this put pressure on the domestic currency. Further to this, the continued  FII selling has already exerted enough pressure on the domestic currency as well. This made the already weak technical setup weaker and saw the markets continuing to remain bearish,” Milan Vaishnav, Consulting Technical Analyst, Gemstone Equity Research & Advisory Services told Financial Express Online.

Notably, the rupee plunged 90 paise to 70.50 against US Dollar following turmoil in the global currency markets. The Chinese yuan slipped to 7.03 level against the US dollar, which investors consider as a key threshold, amid reports that Beijing was devaluing its currency to support exporters, and neutralise US President Donald Trump’s decision to impose fresh 10 per cent tariffs on USD 300 billion in Chinese goods, PTI reported.

Sharing his outlook about the stock market going forward, Ajit Mishra, VP- Research, Religare Broking said that volatility is expected to remain high in the near-term. Given the comforting inflation data and declining growth, expectations are rife for a fourth consecutive rate cut of 25bps by RBI in its policy meet on August 07, 2019, he added.  “However, the commentary on growth and inflation would be more important factor in deciding the course of the markets. Further, on-going turmoil in Kashmir may induce volatility in the markets. On the global front, escalating trade tensions between US and China will keep market participants on edge and cause volatility in oil prices as well as currency,” Mishra said.

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