Renewed North Korea fears drag Sensex 190 pts; Nifty manages to hold 9,900
It was a bad start to the week on Monday as the Sensex cracked 332 points intraday on correction in global peers, but trimmed losses in late trade. Media reports indicated that North Korea may be preparing for another missile launch following hydrogen bomb test on Sunday.
The 30-share BSE Sensex was down 189.98 points at 31,702.25 and the 50-share NSE Nifty fell 61.55 points to 9,912.85, dragged by banks, FMCG and IT stocks.
The broader markets also caught in bear grip as the BSE Midcap and Smallcap indices were down 0.7 percent each on negative breadth. About three shares declined for every two shares rising on the BSE.
All sectoral indices barring Metal and Media closed in red. Nifty Bank, Auto, FMCG and IT indices were down more than half a percent.
Experts expect some volatility to continue in near term due to geopolitical tensions. If North Korea tensions intensified then there could be sharp correction globally, they feel.
“Over the past couple of months, global markets are near their highs and any escalations or tension especially military confrontation between nuclear states like North Korea, US, and its allies could bring a lot of uncertainties in the market,” Abhimanyu Sofat, Vice President, Research at IIFL told Moneycontrol.
“One may see a 4-5 percent kind of correction in the market if the situation escalates,” he said.
Jayant Manglik, President, Retail Distribution, Religare Securities suggests maintaining limited leveraged positions and keeping them hedged until market resume its trend.
India Volatility Index surged 14.26 percent to 13.34.
Globally markets were under pressure after North Korea on Sunday conducted its sixth and most powerful nuclear test to date. North Korea claimed that it was of an advanced hydrogen bomb for a long-range missile. After this, the US warned that any threat from North Korea to its country or its allies would be met with a massive military response.
France’s CAC, Germany’s DAX and Britain’s FTSE were down 0.2-0.4 percent at the time of writing this article. Among Asian markets, Japan’s Nikkei, Hong Kong’s Hang Seng and South Korea’s Kospi fell 0.8-1.2 percent. However, there was demand for safe havens like gold that hit nearly one-year high.
Back home, IOC was biggest loser among Nifty 50 stocks with 4 percent loss, followed by Infosys, HDFC Bank, Adani Ports, Tata Motors, HUL and Kotak Mahindra Bank that shed 1-2.5 percent.
Coal India bucked the trend, up 3 percent after better production and offtake numbers for August and the appointment of new CMD Gopal Singh.
Sun Pharma also saw buying interest in late trade, gaining 3 percent. ONGC, Bosch and Indiabulls Housing Finance gained 1 percent each.
Amond midcaps, Reliance Capital, the most active share on NSE, fell more than 4 percent ahead of ex-date for demerger of home finance business.
Sun TV Network (up 5 percent), TV18 Broadcast (7.8 percent) and NDTV (20 percent) saw a big surge, may be after the Star India won the global media rights of the Indian Premier League for a period of five years (2018-2023) at Rs 16,347.50 crore.
Reliance Industries, Reliance Capital and Sun TV Network were most active shares on the NSE.
Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
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