Investors lose `4.22L cr | Sensex nosedives below 75k-mark

FPJ News Service mumbai

Indian markets stumbled on Monday on weak US markets, constant foreign fund outflows and concerns over US tariffs. The BSE-30 Sensex stumbled over 1 per cent to close below the crucial 75,000 level on prolonged foreign fund outflows. The 30-share BSE benchmark lost 856.65 points to close at 74,454.41. The NSE Nifty dropped 242.55 points or 1.06 per cent to 22,553.35. In the last five trading sessions, the BSE barometer nosedived 1,542.45 points (two per cent) and the Nifty tanked 406.15 points (1.76 per cent).

US stocks got hammered on after weaker-than-expected economic data, weaker services sector and a surge in consumers’ long-run inflation. Existing home sales plummeted beyond even the weak estimate–down 4.6 per cent vs. the expected negative 2.6 per cent. Friday’s economic data left investors, and traders unsettled at a time when the Fed has signaled it is in no rush to cut rates.

Asian stocks ended mostly lower on Monday as weak US economic data rekindled growth worries and US Trump reiterated that his administration would impose reciprocal tariffs soon on countries like India and China. Also weighing on markets, researchers in China said they discovered a new coronavirus in bats that enters cells using the same gateway as the virus that causes Covid-19.

Reports suggested that the Trump administration has asked Mexico to levy their own duties on Chinese imports as part of their efforts to avoid possible US tariffs. On Friday, both the US and China expressed serious concerns over each other's policies in their first call since Trump took office.

“The positive factor in our market is that the valuations of largecaps have turned fair and in certain segments like financials attractive, giving opportunities for long-term investors to buy. Even though the broader market valuations continue to be high, there are opportunities in select stocks in this segment,” said Dr V K Vijayakumar, chief investment strategist at Geojit Financial Services.

The market, Dr VKV said, is facing headwinds from relentless FII selling and global uncertainties relating to Trump tariffs. The sharp surge in Chinese stocks is another near-term headwind. In the US, long-term inflation expectations are rising and, therefore, the expected rate cut by the Fed is unlikely to materialise. The Fed might even turn hawkish, impacting US stock markets.

If this happens and the US bond yields start declining, FIIs may cease to be sellers in India and may even resume buying. The near-term scenario is highly uncertain. The D-Street indices experienced a sharp drop to an eight-month low as market sentiment remained subdued. The decline was primarily driven by significant losses in heavyweight stocks, especially within the IT sector.