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Markets drop for fifth straight session on rising crude oil prices

Sensex has lost 2.6% in the last five sessions on account of political uncertainty and rising crude oil prices

Pavan Burugula  |  Mumbai 

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The declined for the fifth straight session as the setback for the ruling (BJP) in Karnataka along with rising in the global weighed down investor sentiment. The benchmark lost 232 points, or 0.67 per cent to close at 34,616, while the was down 79.7 points, or 0.75 per cent to close at 10,516. The has declined 2.6 per cent in the last five sessions.

Analysts expect the to remain volatile in the near- to medium-term on account of multiple headwinds. The Karnataka election outcome has sparked fears that the central government could take a step back from the reform agenda and instead opt for more populist measures ahead of the general elections in 2019.

Spiralling is another key concern for the since it could have a destabilising effect on the country’s fiscal deficit and economy. The price of oil has surged 46 per cent in the past one year and is currently trading at $77.6 a barrel.

“The markets will remain volatile in the coming months due to global factors such as rising crude prices. While our fiscal deficit looks well under control for now, it could be hit if the crude prices continue to remain high. Rising and heightened political activity are other key headwinds for the Indian markets right now,” said B Gopkumar, chief executive officer, Reliance Securities.

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Pharmaceutical stocks were the biggest losers on Monday with shares of Sun Pharma and Dr Reddy’s Laboratories falling more than four per cent each — the most for any companies. HDFC Bank and HDFC contributed to nearly half of the Sensex fall.

The market breadth also remained negative with the BSE mid- and losing 1.64 per cent and 2.24 per cent, respectively. The market breadth deteriorated further as more than half of the Sensex companies closed below their 200-day moving average (DMA).

Experts say the current volatility in the Indian markets is more on account of global factors than domestic. The hardening of coupled with the strengthening of the dollar has prompted the investors to trim their equity exposure and move to safe heavens.

The dollar index, a measure for the performance of the US dollar against six key currencies, climbed to its highest level in 2018 last week.

Several emerging markets, including India, have seen a sell-off from overseas funds on account of these factors. On Monday, foreign portfolio investors (FPIs) net sold equities worth Rs 4.96 billion, while domestic institutions net purchased equities worth Rs 11.9 billion, data showed.

have net sold shares worth $1.5 billion from Indian markets since April. In May, offloaded shares worth $600 million, data showed.

First Published: Tue, May 22 2018. 00:23 IST
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