Sensex volatile amid global nervousness

More downside on cards, warn experts

Salil Panchal
Published: Aug 25, 2015 06:55:11 AM IST
Updated: Aug 25, 2015 02:02:48 PM IST

Life is not a template and neither is mine. Like several who have worked as journalists, I am a generalist in my over two decade experience across print, global news wires and dotcom firms. But there has been one underlying theme in each phase; life gave me the chance to observe and tell a story -- from early days tracking a securities scam to terror attacks and some of India's most significant court trials. Besides writing, I have jumped fences to become an entrepreneur, as an investment advisor -- and also taught the finer aspects of business journalism to young minds. At Forbes India, I also keep an eye on some of its proprietary specials like the Rich list, GenNext and Celebrity lists. An alumnus of Xavier Institute of Communications and H.R College of Commerce and Economics in Mumbai, I have worked for organisations such as Agence France-Presse, Business Standard, The Financial Express and The Times of India prior to this.

Sensex volatile amid global nervousness
Image: {Shutterstock}
Despite fresh value buying, confidence in the pull back remains weak, since investors are still concerned that foreign investors could pull out funds from emerging markets as China’s markets fell further

The BSE benchmark 30-share Sensex index fluctuated wildly in nervous trade on Tuesday, gaining 0.70 percent or 180.78 points to 25,904.47 in afternoon trade, after it erased all morning losses. The markets had opened down as much as 443 points to a 2015 new low of 25.298.42.

However, despite fresh value buying, confidence in the pull back remains weak. Investors are still concerned that foreign investors could pull out funds from emerging markets as China’s markets fell further.

Analysts and economists with top research firms were categorical that the worst was not over, after Monday’s bloodbath across Asia, but urged investors not to panic. A Nomura Southeast Asia equity strategy report released on Tuesday said current growth concerns should “not be extrapolated to be the beginning of a financial crisis and a growth collapse in Asia”.  

The Indian rupee was trading at 66.55 to the dollar on Tuesday, after breaching the 66 level a day earlier. Finance minister Arun Jaitley and Reserve Bank of India governor Raghuram Rajan have since Monday sought to allay fears of investors, saying the country’s macroeconomic conditions were stable and no domestic factors were contributing to the market weakness.

Monday’s fall for the Sensex was its worst single-day percentage fall since January 7, 2009.  

The meltdown at the stock markets was something economists and fund managers had feared for some time, considering that the Chinese government and the central bank had for weeks been trying their best to reassure investors and introduce policies to revive sentiment, even as economic indicators turned weak. On Tuesday afternoon, the benchmark Shanghai Composite index was down 7.74 percent at 2,961.33.

“Even after Monday’s fall, there are no rational grounds for claiming that the Indian stock market has bottomed out. As Prime Minister Narendra Modi’s resets bite deep into the Indian economy, we expect economic growth to slow down and we expect corporate earnings growth to remain weak,” said Saurabh Mukherjea, CEO, Institutional Equities with Ambit Capital.

Automobile, engineering, banking and IT stocks were the hardest hit.

Mukherjea said the only way to invest in such a market was to focus on high-quality companies which are available at reasonable valuations.  

Mixo Das, Asia (ex-Japan) equity strategist, with Nomura, said despite the jittery markets, current growth concerns should not be extrapolated to be the beginning of a financial crisis and a growth collapse in Asia. He assessed that China still has ample room to ease macro policies; Asia’s external fundamentals are in much better shape than before the Asian crisis; and that most countries have room to expand fiscal policy.
 

Click here to see Forbes India's comprehensive coverage on the Covid-19 situation and its impact on life, business and the economy​

Check out our end of season subscription discounts with a Moneycontrol pro subscription absolutely free. Use code EOSO2021. Click here for details.

Show More
Post Your Comment
Required
Required, will not be published
All comments are moderated