Sensex at six month low, sheds 514 points amid capital outflow concerns

Mumbai: Markets took another blow today as the Sensex plunged over 514 points to end at nearly 6-month low of 26,305 while the Nifty cracked below 8,200 mark on concerns about outflows amid surging US yields and the dollar gathering more steam. Currency market was hit hard, with the rupee down 57 paise to a five-month low of 67.82 against the US currency during the day.

Sentiment continued to be weighed down by the government’s move last week to withdraw high-value currency notes and disappointing quarterly earnings by some more blue-chip companies, brokers said. In a surprise move, the government had banned Rs500 and Rs1,000 currency notes in a bid to curb black money.

The Sensex opened lower at 26,809.61 and dropped further before ending down 514.19 points, or 1.92%, at 26,304.63, a level last seen on 25 May. It had lost 698.86 points on Friday on worries that US President-elect’s Donald Trump’s impending reforms may spark outflows from emerging markets (EMs). The NSE Nifty fell sharply by 187.85 points, or 2.26%, to 8,108.45, its lowest closing since 27 June when it settled at 8,094.70.

Intra-day, it cracked below the 8,100-mark to hit a low of 8,093.20. Persistent capital outflows from EMs amid all major Asian currencies declining against the US dollar since Trump’s shock win in the US presidential election on 8 November was another factor behind the big plunge on the domestic bourses. For the second consecutive month of decline, wholesale inflation eased to 3.39% in October, data showed on Tuesday.

Meanwhile, government data released on Friday showed that industrial production grew a meagre 0.7% in September, mainly due to poor show by manufacturing and mining sectors coupled with decline in capital goods output. Both the stock exchanges, BSE and NSE, remained closed on Monday on account of Guru Nanak Jayanti.

Malaysia’s ringgit and South Korea’s won lost at least 2.8% each. A gauge of the greenback erased its losses this year as US Treasury yields surged on speculation that Trump’s pro-growth policies would boost inflation and push interest rates higher. The broader markets too remained under pressure, with the BSE small-cap index slumping 4.67% and the mid-cap 3.91%.

However, when all the sectors fared poorly, only BSE IT index managed to keep its head up, logging gains of 0.30%. This uptick was fuelled by buying in Wipro, TCS and Infosys, rising by up to 1.27%. Tata Motors was the biggest loser from the Sensex pack on the day— sinking 9.88% to Rs 457.25 after the company’s standalone net loss widened to Rs631 crore in the September quarter.

Meanwhile, foreign portfolio investors (FPIs) sold shares worth a net Rs1,493.27 crore last Friday, as per provisional data. Other Asian markets also finished lower as Japan’s Nikkei fell by 0.03% while Shanghai Composite was down 0.11% . European stocks, however, were a shade higher in their early deals as the US dollar stood at an 11-month high. Key indices in the UK, France and Germany rose by up to 0.88%.