 "World stock markets go downhill on Brexit fears")
Global financial markets shivered on Monday as the concerns over whether Britain would exit the European Union (EU) dominated stock markets across the world. The Indian equity markets, too, felt the pinch as it ended one per cent lower for the third consecutive day on Monday.
According to the latest opinion poll, the ‘Leave EU’ group is gaining ground, making investors anxious. Also, the US Federal Reserve would meet for a two-day policy review starting Tuesday. Caution also prevailed on D-Street, with investors keen to know whether Federal Reserve Chair Janet Yellen would raise interest rates. However, after surprisingly weak jobs data in the US last month, analysts believe the Fed is not ready for a rate hike.
The S&P BSE Sensex ended down 239 points to settle at 26,397 and the Nifty50 closed 59 points lower at 8,111.
“Today’s (Monday’s) fall is all because global cues are bad,” said G Chokkalingam, chief executive officer and founder Equinomics Research and Advisory. “The concerns over Brexit and Fed as well as some level of profit-booking also caused the downfall.”
“The markets will remain volatile for the next two or three weeks. I expect the markets to fall two or three per cent by mid- July, assuming the monsoon doesn’t go bad,” says Chokkalingam.
The market participants were also cautious ahead of the release of consumer inflation data, to be released after market hours. After the Index of Industrial Production (IIP) shocker, Consumer Price Index (CPI) data showed inflation for May had hardened to 5.76 per cent, up from 5.4 per cent in April.
The news coming out of China spooked investors, with data showing investment growth cooling. Asian markets such as the Nikkei, Hang Seng and Shanghai all fell three per cent.
In the currency market, the rupee hardened as it breached the 67-mark against the dollar. The sterling hit an eight-week low while safe havens such as yen strengthened further. The grim outlook was transferred to the commodity markets as the crude oil slipped on Monday on jump in US drillings. Brent crude fell to $50 a barrel. Gold, another safe haven, hit the highest in four weeks.
On the individual stock level, Tata Steel melted by three per cent. Goldman Sachs has downgraded the stock to ‘sell’ from ‘neutral’, saying the stock is pricing in most of the potentially positive drivers such as higher profitability and sale of UK assets.
Other stocks that came under pressure were ICICI bank, Tata Motors, BHEL, State Bank of India, all down between two and three per cent each.
Sugar stocks posted a spectacular rally, gaining up to 15 per cent, in a weak market on improving prospects of industry and companies.
