Bulls run for cover as  trade war woes rise 

Sensex crashes 509 points, Nifty slips below 11,300 mark

Mumbai : Market benchmark BSE Sensex on Tuesday crashed 509 points to close at more than one-month low of 37,413.13 due to heavy selling in FMCG, metal, auto and financial stocks amid growing concerns over intensifying global trade war.

Two-days market crash made investors poorer by more than Rs 4.14 lakh crore.

The market capitalisation of the BSE-listed companies tumbled by Rs 4,14,121.84 crore to Rs 1,53,25,666 crore in two consecutive days. Market experts said that rupee depreciation is a big concern for market sentiment.

The 30-share index tanked more than 1 per cent for the second day in a row after the rupee slid to a new lifetime low of 72.73 in afternoon trade. Stock markets had opened higher but bears regained the control soon to wipe out initial gains as crude oil prices rebounded in Asian trade. The BSE barometer closed the day with a hefty fall of 509.04 points or 1.34 per cent at 37,413.13. This is the weakest closing since August 2 when it had ended at 37,165.16.  The NSE Nifty cracked below the 11,300-mark by falling 150.60 points or 1.32 per cent at 11,287.50. Intra-day, it shuttled between 11,479.40 and 11,274.

Benchmark equity indices are likely to extend weakness on Wednesday due to fear that the trade dispute between China and the US may blow up into a full blown trade war. Fear that China may retaliate with a counter import duty on US goods spooked investors today and is likely to hit indices on Wednesday as well.

Concern over outflows by foreign investors and prospects of the Reserve Bank of India raising interest rate are seen dampening the sentiment. “With the kind of macro conditions and the unceasing depreciation in rupee that we are seeing, RBI must hike interest rates in October, if not earlier,” said AK Prabhakar, head of research with IDBI Capital.

Surging crude oil prices, rupee plunging to record lows and widening trade deficit, besides negative global leads were major factors that dampened sentiments on the domestic bourses, a broker said.

In Asian trade, international benchmark Brent crude again went past the $78 to trade at $78.52 a barrel, by rising 1.30 per cent amid looming US sanction against Iran’s petroleum industry.

Investors were cautious as trade war concerns between the US and China escalated, brokers said. “The threat of trade tariffs, outflow of foreign funds and concern on domestic macros will influence investors to stay on a cautious note,” Vinod Nair, Head of Research, Geojit Financial Services said.

Expectations of a US interest rate hike this month by the Federal Reserve that may strengthen the dollar and accelerate sell-off by foreign funds in emerging markets too negatively impacted sentiments, brokers said.

 Of the Sensex constituents, Tata Steel recorded the biggest fall of 3.46 per cent, followed by PowerGrid at 3.21 per cent.

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