Sensex, Nifty slide to lowest close in 4 and a half months

Mumbai: The benchmark Sensex and Nifty slid to their lowest close in nearly four and a half months, mirroring the weakness in Asian shares as concerns that Donald Trump taking over as US President, led to fears of higher interest rates, triggering capital outflows from riskier bets such as emerging markets.

Earlier in the day, BSE’s 30-share Sensex fell as much as 2.69% or 740.50 points to 26,777.18 points, while NSE’s Nifty 50-share dropped 2.82% or 240.80 points to 8,284.95 points. Sensex closed 2.54% or 698.86 points lower at 26,818.82 points, its lowest close since 29 June. Nifty shed 2.69% or 229.45 points to close at 8,296.30 points, its lowest close since 30 June.

Market breadth was in favour of bears as losers were nearly five times the gainers on the BSE. “Risk-off trade is on,” said Ajay Bodke, chief executive officer (CEO) and chief portfolio manager, portfolio management services, at securities house Prabhudas Lilladher Pvt. Ltd, pointing to the anxiety in world markets over Trump’s surprise election.

“The US bond yields have risen sharply. Trump’s announcement of massive push to the US economy, has led to fears that it will stoke inflation in future. The dollar is strengthening and money is moving out of emerging assets,” said Bodke.

The dollar index, which measures the value of the greenback relative to a basket of six major currencies, was up 0.09%. It advanced for fifth straight sessions and rose 1.9% during this period.

On the domestic front, the rupee fell as much as 0.9% in the day against the US dollar at 67.22, the lowest level since 22 August “On the domestic front, there are understandable concerns on the short-term impact on aggregate demand in the consumer-focused sectors due to the demonetization move. In recent times, most portfolios had gravitated towards consumer-focused companies,” added Bodke.

Among the emerging markets, India is one of the few economies where domestic consumption forms 70% of GDP, while in case of other emerging markets, net exports are a biggest chunk of GDP, he pointed “Once the semblance of sanity returns, money should start returning to India,” said Bodke.

Volatility jumped with NSE’s VIX or volatility index - spiking 12.34%, to 17.37, the level last seen on 29 September. Consumer-focused companies led the losses on the bourses, with the respective sectoral indices leading the losses, on fears that the demonetization move will hurt consumption in the near term.

BSE Auto index and BSE Consumer Discretionary Goods & Services index led the losses with 4.53% and 4.30% decline respectively. Mahindra & Mahindra Ltd. fell the most among Sensex stocks. It closed 6.02% lower even as the country’s top utility vehicle maker said its net standalone profit rose 27% at Rs1,163.27 crore for quarter ended September.

The country’s largest lender State Bank of India slid 3.09% after it said its net profit for the September quarter fell 34.6% from a year-ago period as provisions against bad loans doubled from last year. Sun Pharmaceutical Industries Ltd. led the gains for Sensex. Its shares rose 3.30% after the pharmaceutical maker said late on Thursday its fiscal second-quarter profit more than doubled as it received $45 million in milestone payments from a partner.