Renewed fears of trade war pull down markets

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The S&P BSE Sensex fell 284.11 points or 0.85 per cent to close at 33,033.09.

MUMBAI: Indian stocks extended losses to the sixth straight session on Wednesday, tracking the weakness among Asian peers, which were dragged down as concerns of a global trade war increased after US President Donald Trump’s economic adviser Gary Cohn resigned. Cohn was a supporter of free trade. Key indices hit their lowest levels of 2018 for the second day in a row as public sector bank shares continued to plunge on worries about the deepening effect of the PNB fraud on the banking system.

The S&P BSE Sensex fell 284.11 points or 0.85 per cent to close at 33,033.09 while the National Stock Exchange of India’s Nifty slipped 95.05 points, or 0.93 per cent, at 10,154.20.

The Nifty and Sensex have fallen about 9 per cent from their all-time high levels. Sensex and Nifty had hit alltime highs of 36,443.98 and 11,171.55, respectively, on January 29.

From their record high levels, Nifty and Sensex have fallen 1,017.35 points and 3,410.89 points, respectively, in absolute terms. The Nifty and Sensex have lost 428.4 points and 1,412.66 points, respectively, in the past six consecutive sessions.

The fall has also brought the indices close to breaching their 200-day moving averages-a key technical indicator. The Nifty is 0.2 per cent away from its 200-day moving average of 10,131.53. The Sensex is not far behind, and is 0.9 per cent away from its 200-DMA of 32718.75. The 200-DMA is a long term average and is considered a major support level.

Experts see more correction in the days to come if Nifty breaches and stays below the 200 DMA level.

“If 200 DMA is broken, Nifty may see a dip below 10,000 levels. The immediate support is at 10,033-10,077, and if these levels are broken, Nifty may fall to 9,850 levels,” said Chandan Taparia, derivative analyst at Motilal Oswal.

“Global equities are witnessing weak sentiments with heightened volatility. In addition to this, domestic equity market is impacted by the unravelling of banking fraud, fear of increasing stress in the banking sector and possibility of further hardening of yields,” said Harsha Upadhyaya, Chief Investment Officer (Equities), Kotak Mahindra Asset Management Company.

The Nifty PSU Bank index was once again one of the worst hit on the NSE amid the continuing sell off, ending down 3.57 per cent at 2,831.40. The Bank Nifty fell 1.29 per cent at 24,134.10.

Provisionally, Foreign Portfolio Investors sold shares worth ?719.78 crore while Domestic Institutional Investors bought shares worth ?409.34 crore.

In other global markets, major stock indices declined as concerns of a global trade war increased after White House economic adviser Gary Cohn resigned. Cohn was one of the voices in the White House who was against the proposed tariffs on the import of steel and aluminium. US President Donald Trump last week had proposed these tariffs.

Back home, the banking sector has been hit by the ?12,600 crore fraud case at the Punjab National BankBSE 1.20 %. The Serious Fraud Investigation Office on Tuesday summoned ICICI Bank CEO Chanda Kochhar and Axis ank MD Shikha Sharma in connection with the fraud at Gitanjali Gems.

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[“Source-economictimes”]