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Nachiket Kelkar
Nachiket Kelkar

markets roundup

Weakness continues; Sensex sheds more than 1,100 points over the week

BSE-pti (File photo) Representational image

More sabre-rattling by US President Donald Trump on North Korea sent stock markets across the globe tumbling again on Friday, as already nervous investors pulled away from risky equities. Tracking the rising geo-political concerns, India's benchmark stock indices plunged a little over one per cent on Friday, leading to their first weekly loss in six weeks.

The BSE Sensex was down 318 points to close at 31,213.59 points. The wider NSE Nifty50 ended 109 points lower at 9,710.80 points.

Globally too, concerns over more aggressive posturing from the US officials in the wake of North Korea talking of a possible attack on Guam, where the US has a major military base, hit stocks. The US markets logged their worst performance since May; the Dow Jones Industrial Average was down 0.9 per cent and the tech-heavy Nasdaq Composite Index slumped over 2 per cent on Thursday.

That had a ripple effect in Asia, where all major indices, barring Japan's Nikkei Stock Average, closed about one per cent or more lower. All the European stock markets were also trading sharply in the red.

The sell-off, shaved off 1,112 points (3.4 per cent) of the Sensex over the week, while the Nifty 50 eroded 355 points (3.5 per cent).

Securities and Exchange Board of India's crackdown on suspected shell companies also kept risk appetite under check.

“VIX (volatility index) soared over 15 for the first time in six months, as anxiety prevailed over the aggravating tensions between the US and North Korea, and investors were largely cautious ahead of the weekend,” said Anand James, chief market strategist at Geojit Financial Services.

Among the major losers, India's largest lender State Bank of India declined 5.4 per cent; the worst performer on the Sensex on Friday, as bad loans rose sharply in quarter ended June 30. Tata Motors, which had declined sharply on Thursday post sub-par earnings, fell further close to two per cent today after it called off its partnership talks with the Volkswagen Group.

Other major losers included Mahindra & Mahindra, which was down three per cent, and ONGC, Reliance, NTPC and Larsen and Toubro, all ended down over two per cent. India's largest drug maker Sun Pharma, which posted a surprise loss, also ended 1.9 per cent lower.

Sebi had on Tuesday released a circular, urging the exchanges to take action against 331 suspected shell companies. Trading in these companies was restricted to once a month. Three of these companies–J Kumar Infraprojects, Prakash Industries and Parsvnath Developers–approached the Securities and Appellate Tribunal against their inclusion in the list. On Thursday, SAT stayed the Sebi directive against J Kumar Infra and Prakash Industries. But with the investor perception already hurt, the two stocks hit the 20 per cent lower circuit limit when their trading resumed on Friday.

Despite the overall weakness in the equity markets, Cochin Shipyard made a strong debut on the stock markets. The IPO, which included a 10 per cent stake sale by the government and a 20 per cent fresh issue of shares by the company, surged 20 per cent on listing day. The stock opened at Rs 435 on the BSE, versus issue price of Rs 432 and closed up near 21 per cent at Rs 522.

The Sensex had hit a life high of 32,686.48 on August 2, buoyed by strong domestic as well as foreign fund flows. But, that looks quite distant now, with a near 1,500 points fall since, which analysts say have lowered the expensive valuations marginally.

“This selling frenzy should lead to some sanity going ahead. Any such dip will give rise to more investment opportunities,” said Mayuresh Joshi, fund manager at Angel Broking.

Joshi said, one can never really time the markets or predict the bottom, so investing in a staggered manner and in quality stocks will pay dividends over the longer-term.

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Topics : #sensex | #BSE

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