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Sensex, Nifty see sharpest single-day fall in 2017 on global cues
Posted on 23rd September 2017
Mumbai: Indian benchmark indices posted their biggest daily percentage decline in 10 months on Friday, as a North Korean threat to carry out a hydrogen bomb test in the Pacific Ocean rattled global markets.

The Indian government’s stimulus spending plan and jitters that it would widen the fiscal deficit also contributed to the decline, which was led by bank stocks.

The National Stock Exchange’s 50-share Nifty index dipped 1.56% to close below the psychological 10,000-point mark at 9,964.40 points. The BSE Sensex tumbled 1.38% to end at 31,922.44 points.

North Korea struck back at US President Donald Trump’s threats to destroy it, with Kim Jong Un warning of the “highest level of hardline countermeasure in history” and his foreign minister suggesting that could include testing a hydrogen bomb in the Pacific Ocean.

“The markets saw a sell-off of over 1%, which in our opinion is on account of weak global cues, which were due to geopolitical tensions surrounding North Korea,” said Nitasha Shankar, senior vice-president and head of research at YES Securities Ltd. “The sell-off was more pronounced as foreign institutional investors (FIIs) continued to pull funds out in reaction to the political tensions and recent revision of China’s sovereign rating.”

Stock indices in Hong Kong, South Korea and Taiwan also fell around 1% on Friday but the decline in India was the sharpest among Asian markets.

Indian stocks are the most expensive among peers, prompting concerns about valuations overshooting fundamentals amid slow economic growth and an elusive corporate earnings recovery.

“Impact of good and services tax (GST) could be more prolonged and earnings recovery could be delayed by a quarter or two. As a result, a market correction at this juncture should not come as a surprise,” said Ravi Gopalakrishnan, head of equities at Canara Robeco Mutual Fund.

The price-to-earnings ratio for FY19 is 18.48 and 18.18 for the Sensex and Nifty respectively, whereas that for MSCI Emerging Markets is 12.76 and MSCI World 16.50.

Analysts described the correction in the Indian markets as healthy and long overdue. “The correction was required due to excessive optimism built over the months. The sell-off is triggered by Fed’s comments on unwinding the quantitative easing beginning next month, consequence of which is unknown. Fed action will support the dollar which has already started to recover. As the Indian currency weakens against the dollar, it may have a negative effect on markets,” said Jimeet Modi, chief executive of Samco Securities.

Most stocks in the capital goods, healthcare and metals sectors were under pressure on Friday. Among sectoral indices, the BSE Metal index fell 3.9%, reacting to China’s credit downgrade by S&P Global Ratings, triggering concerns that demand from the world’s second-biggest economy may decline.

So far this year, FIIs have bought a net $6.4 billion worth of stocks, but sold $761.55 million worth of Indian equities in September.

Related Companies: Bombay Stock Exchange - BSE   National Stock Exchange of India Ltd (NSE)    

Other Latest News
Leading bourse National Stock Exchange (NSE) will auction investment limits for overseas investors for purchase of corporate bonds worth Rs 94.75 billion on Monday.

The auction will be conducted on NSE's e-bid platform from 1530 hrs to 1730 hrs after the close of market hours, the exchange said in a circular.

The Election Commission is learnt to have recommended to the President the disqualification of 20 AAP MLAs for allegedly holding office of profit.

In its opinion sent to President Ram Nath Kovind, the Election Commission said by being parliamentary secretaries, they held office of profit and were liable to be disqualified as MLAs of the Delhi Assembly, highly placed sources said.

To make REITs and InvITs more attractive, markets regulator Sebi has allowed strategic investors like registered NBFCs and international multilateral financial institutions to invest up to 25 per cent of the total offer size of such trusts.

"The strategic investor(s) shall, either jointly or severally, invest not less than 5 per cent and not more than 25 per cent of the total offer size," Securities and Exchange Board of India (Sebi) said in a circular.

Consolidated profit of IT major Wipro Ltd dropped 12 per cent to Rs 19.3 billion for the quarter ended December 2017 as against Rs 21.89 billion in the previous quarter.

However, revenue from operations rose 2 per cent to Rs 136.69 billion as against Rs 134.23 billion in September 2017.

NEW DELHI: Telecom service provider Idea Cellular on Thursday announced "cashback offer" worth Rs 3,300 on online recharges of Rs 398 and above till February 10, 2018.

"On all 'Unlimited' plan recharges of Rs. 398 and above, done through any online channel, Idea customers will get eight discount vouchers of Rs. 50 each," the company said in a statement here.

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