 "Markets collapse on Indo-Pak tension; Sensex sheds points")
Benchmark indices ended at their lowest closing levels since August 26, 2016 as risk-aversion prevailed following September F&O expiry today and concerns over foreign capital outflows amid geo-political tensions arising between India and Pakistan after the Indian Army conducted surgical strikes across LoC in Pakistan late last night.
The S&P BSE Sensex ended down 465 points to settle at 27,828 and the Nifty50 settled 154 points lower at 8,591. In the broader market, both the BSE Midcap and Smallcap indices underperformed the front-liners with losses of 4% and 5%, respectively.
Sensex and Nifty witnessed sharpest single day fall in past three months in percentage terms. Earlier on June 24, the benchmark indices were down 2.2% each.
Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services said, "As markets got first whiff of developments across the border, panic liquidation gripped the stocks enmasse resulting in a sell off across board. However F&O expiry dynamics ensured that liquidation spree did not evolve into a free fall. History has also shown us that such events have only a short term impact on financial markets and the recovery is often swift. "
He further adds, "Indian markets had risen earlier in the day after OPEC’s decision to cut production left global equities soaring. However, consecutive days of rise had rendered the stocks ripe for profit booking, adding to the feverish nature of the falls after news of escalation of Indo-Pak tensions broke out. Unsurprisingly, Nifty VIX, a measure of volatility, rose sharply by almost 35% to 18.29."
The crash in the stock market on Thursday made Dalal Street investors poorer by over Rs 2 lakh crore, where the benchmark Sensex tumbled by more than 450 points, amid a massive sell-off in banking, power, metal, capital goods and pharmaceutical shares.
Following the extreme weakness in stocks, the market capitalisation (m-cap) of BSE-listed firms plunged by Rs 2.36 lakh crore to Rs 109,67,500 crore.
Commenting of today's sell of, Jimeet Modi, CEO, SAMCO Securities added, "Indian markets had not witnessed any meaningful correction since last 6 months. The rise of 25% was almost uninterrupted without any significant correction. Often over heated market takes the clue from external events to jumpstart the correction. This time cross border skirmishes seems to be the reason for the bulls to release some pressure in the markets."
INDIA-PAKISTAN TENSION
The Indian Army conducted surgical strikes across the Line of Control (LoC) on Wednesday night on launchpads where terrorists had amassed and positioned themselves to infiltrate into India, Director General Military Operations (DGMO) Lt Gen Ranbir Singh informed the gathered members of the press at the joint briefing following the Cabinet Committee on Security meeting held on Thursday.
India undertook surgical strikes across the Line of Control, breaching self-imposed military discipline, destroying infrastructure as well as killing terrorists who were poised to cross the border and damage Indian cities and Jammu and Kashmir.
GLOBAL MARKETS & CRUDE OIL
An agreement by OPEC members to curb output boosted oil company shares on Thursday, lifted the currencies of crude-producing countries, and drove yields on low-risk government debt higher. Global stocks were pulled higher by the oil company rally.
Oil prices, however, edged off their highs as some investors took profits on Wednesday's more than 5 percent surge, which was prompted by OPEC's first deal to limit output since 2008. Scepticism over how it would be implemented also crept in.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.7%. The main MSCI emerging market equities index rose 0.6%.
Goldman Sachs said the deal reached by OPEC crude producers on Wednesday to curb output should add $7 to $10 to oil prices in the first half of next year.
STOCK TRENDS
Top losers from the Sensex pack were ICICI Bank, Adani Ports, SBI, Axis Bank and Tata Steel, all slumping between 3%-5%.
ICICI Prudential Life Insurance slipped to Rs 297, down 11% against its issue price of Rs 334 per share on the National Stock Exchange (NSE) in intra-day after weak listing.
"For those investors who are sitting on unrealized gains should book partial profits and raise cash levels, as in any case Indian markets were enjoying premium valuations and it is time to en cash some of them. All the positives are discounted, and therefore in the short term, risk to reward ratio is unfavorable for the bulls. Therefore, short term traders and medium term investors should actively consider booking profits and stay on the sidelines. A fall of 2% in Nifty50 compared to the gains of 25% in previous 6 months should not deter investors to pull the trigger,” adds Jimeet Modi of SAMCO Securities.
Reliance Communications (RCom), Ashok Leyland, Hexaware Technologies, MindTree, Polaris Consulting & Services, Tata Elxsi, AstraZeneca Pharma India and Coffee Day Enterprises were among 13 stocks from the BSE500 index hitting their respective 52-week lows on the BSE in intra-day trade after sharp decline in equity markets.
Shares of Multi Commodity Exchange of India (MCX) hit fresh 52-week high of Rs 1,400 in intra-day deal after the Securities and Exchange Board of India (Sebi) has allowed commodity exchanges to introduce trading in options. The stock closed over 5% higher.
"From a fundamental perspective, markets are still attractive for long term investors. Therefore, such dips present a good buying opportunity which is visible in the recovery from the day’s lows. Escalation in geo political tensions was the reason behind today's fall in the markets," said Nitasha Shankar - Sr. Vice President and Head of Research, YES Securities.
ALSO READ: Ashok Leyland, Hexaware Technologies, RCom, Coffee Day Enterprises hit 52-week lows
Top losers in the S&P BSE Mid-Cap index were Reliance Communications (down 9.21%), GMR Infrastructure (down 8.36%), Adani Enterprises (down 8.07%), Indian Bank (down 7.64%), Steel Authority of India (down 7.9%).
Top losers in the S&P BSE Small-Cap index were Signet Industries, Morepen Laboratories, Sarda Energy & Minerals, Prakash Industries and Orchid Pharma down 12%-20%.
With Capital Market & Reuters inputs
