Sensex tanks 400 points; five factors that dragged the market

NEW DELHI: Benchmark indices opened on a weak note on Monday, as strong jobs data released in the US dashed hopes of aggressive US Fed rate cuts, pushing oil prices higher and the rupee lower. Asian markets fell up to 2 per cent on fears foreign inflows may ebb. For domestic markets, concerns over another fraud at PNB and the proposed revision in minimum shareholding norms weighed on stocks. An ET poll of 20 money managers and heads of research at domestic brokerages showed that the Nifty is likely to see limited upside or could possibly drift lower by Diwali.At 9.18 am, the BSE Sensex was trading points, or 424.52 points, or 1.07 per cent, higher at 39,085.52. The NSE barometer Nifty50 fell 122.90 points, or 1.04 per cent, to 11,688.25. Here's what dragged the markets southUS jobs data: The job growth in the world’s largest economy rebounded strongly in June, with government payrolls surging, the Labor Department’s closely watched employment report showed on Friday, suggesting May’s sharp slowdown in hiring was probably a one-off, Reuters reported. This has dashed hopes of aggressive rate cuts by the US Fed as was anticipated earlier. Employers added 224,000 jobs last month, the most in five months. Selloff in Asia: US jobs data dragged Asian shares lower. Shanghai Composite index fell 2.5 per cent at the time of writing this copy. Hong Kong’s Hang Seng and South Korea’s KOSPI fell 1.8 per cent each. Japan’s Nikkei was down 1.01 per cent while Taiwan’s TAIEX was down 0.53 per cent. The sharp fall in Asian shares had a rub off on Indian shares, which fell on Friday amid disappointment over the Budget announcements. Rupee, crude oil: The US Jobs data raised dragged emerging market currencies against dollar. South Korean won and Indonesian rupiah led the losers falling half-a-per cent each against US dollar. The rupee fell 21 paise to 68.63 a dollar level. Meanwhile, Brent crude futures were up 10 cents, or 0.2 per cent, at $64.33 in early trade. Budget proposals: The Budget proposed increasing the minimum public shareholding to 35 per cent from 25 per cent, which spooked the market sentiment. Going by history, if implemented the companies will get a time frame of 1-2 years to meet the threshold. It depends on SEBI if they want to fasten the process and the stringency with which the deadline is implemented, Edelweiss Securities noted. Besides, the Budget proposed a 20 per cent tax in case of buy back of shares Earnings season: Investors were also cautious ahead of earnings season which will kick start from Tuesday. The IT bellwethers TCS will announce its first quarter numbers on Tuesday, followed by Infosys on Friday.

from Economic Times https://ift.tt/2xwhkUD