Sensex falls 216 pts on geopolitical tensions; Nifty manages to hold 9900

Dragged lower by geopolitical risks, fall in financials and healthcare stocks, benchmark indices ended lower for the third consecutive session on Wednesday. Unwinding of leveraged positions in midcaps and smallcaps also hit market sentiment.

The 30-share BSE Sensex closed down 216.35 points at 31,797.84 while the 50-share Nifty managed to hold 9,900 level at close. The index was down 70.50 points to 9,908.05 after hitting an intraday low of 9,893.05.

Tensions on the global front escalated after North Korea reportedly said that it was ‘carefully examining’ a plan to strike the US Pacific territory of Guam with missiles. The reported statement came hours after US President Donald Trump’s warning that Korea’s actions will be met ‘with fire and fury’.

Global markets were under pressure amid escalating that geopolitical tensions between the US and North Korea. France’s CAC, Germany’s DAX and Britain’s FTSE were down 0.8-1.7 percent at the time of writing this article. Asian markets mostly ended lower.

Back home, actions by the market regulator, the Securities and Exchange Board of India (SEBI) on supposed ‘shell’ companies and the curb on trading by them also continued to weighed on sentiment. However, sources told CNBC-TV18, there could be some respite to certain firms within a week.

Government sources told CNBC-TV18 that market regulator SEBI may issue notification soon to give respite to certain shell companies. The regulator is likely to allow trading in about 12 companies once they explain their position and the trading may resume in a week.

The broader markets underperformed benchmarks as the BSE Midcap and Smallcap indices fell 1.7 percent each as investors were still reportedly unwinding their leveraged positions. More than three shares declined for every share rising on the BSE.

Analysts said they were advising investors to pare their positions in high beta stocks as there was a possibility of new list of such companies being released.

“In the context of the recent SEBI order related to ‘shell’ companies, we reiterate investors to strictly invest only in companies with good corporate governance and strong balance sheets,” Sanjeev Zarbade, VP-PCG Research, Kotak Securities said.

The fundamentals of the Indian economy are continuously improving, which gives greater confidence in the medium to long term potential of Indian equities, he believes.

All sectoral indices ended in red, with the Nifty Pharma falling the most (down 4 percent) followed by Auto, Bank and FMCG.

Sun Pharma was biggest loser among Sensex stocks, down 5 percent after subsidiary Taro reported a 50 percent degrowth in Q1 profit on pricing pressure in the US.

Aurobindo Pharma lost nearly 6 percent ahead of earnings due later today. Lupin, Dr Reddy’s Labs and Cipla were down more than 2 percent.

Among auto stocks, Tata Motors and Eicher Motors slipped 2-3 percent ahead of results due later today.
Adani Ports, ICICI Bank, L&T, Axis Bank, Maruti Suzuki and Bajaj Auto among others were down 1-4 percent while HDFC, Infosys, Kotak Mahindra Bank, Asian Paints, ONGC and NTPC bucked the trend with 0.5-1 percent gains.