China effect: Sensex at 20-month low

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The benchmark stock market indices continued to plunge on Monday, with the Sensex closing at a 20-month low of 24,188.37. The Nifty lost over 1 per cent as well, finishing the session at 7,351.

The fall in international crude oil prices — Brent sank to a new low of below $28 a barrel on Monday — and uncertainty in the Chinese markets continue to hold Indian equity in a bear grip.

This reflected in the sharp 5 per cent fall of Reliance Industries, the largest domestic private sector oil refiner and marketer. RIL’s stock, the top Sensex loser, closed at ₹1,018, while public sector upstream oil major ONGC shed 2 per cent of its market value.

With exports falling for the 13th straight month in December, commodities, energy and real estate indices were the biggest losers on the NSE, all closing deep in the red.

Monday’s fall was the starkest for the mid- and small-cap indices, as retail investors — their biggest supporters — chose to exit. The BSE Midcap Index lost 2.72 per cent to close at 10,062.35 while the BSE Smallcap lost a massive 4.05 per cent to finish at 10,345.81.

Vinod Nair, Head – Fundamental Research, Geojit BNP Paribas Financial Services, said that the losses in small- and mid-cap stocks revealed that retail investors were cautiously reducing their exposure and preferring to stay away from the market.

Net sellers

Retail investors on the BSE, in fact, were net sellers on Monday, offloading equity worth ₹66.36 crore.

Foreign portfolio investors, too, net-sold equity of ₹1,203.84 crore at the start of the week. Domestic institutions, it appears, are using the opportunity to buy, picking up net equity worth ₹1,122.80 crore.

In a note, Jayant Manglik, President – Retail Distribution, Religare Securities, said, “We expect more downside going ahead mostly in small- and mid-cap spaces. So traders should avoid all leveraged positions and stick to defensives and fundamentally strong counters. Investors should use every dip to accumulate good companies.”

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