Sensex slumps 650 points, Nifty breaches 10,500 as exit polls predict close race

Weak global markets and uncertainty over the outcome of state election results sent Indian markets sharply lower today. The Sensex slumped 650 points to 35,016 while Nifty breached 10,500 levels, down 1.7%. Exit poll results indicate a tight race between BJP and Congress in Madhya Pradesh and Chhattisgarh and an edge for the Congress in Rajasthan. The election results for five states Rajasthan, Telangana, Madhya Pradesh, Mizoram and Chhattisgarh will be announced tomorrow. The rupee fell sharply today to 71.23 a dollar as compared to Friday’s close of 70.82.

Sensex slumps 650 points, Nifty breaches 10,500 as exit polls predict close race

Here are 10 updates from the stock markets:

1) Among 30 Sensex stocks, 28 stocks traded in the red. Only TCS and Wipro edged higher. Yes Bank, M&M, Bharti Airtel, RIL and Adani Ports were down between 2% and 3.5%.

2) The broader markets were also under strong selling pressure BSE midcap and smallcap indices also falling over 1.5% each.

3) Some analysts expect a knee-jerk reaction from the markets, depending on the outcome of the state election results. G Chokkalingam, founder & managing director of Equinomics Research & Advisor, said: “There may be knee-jerk reaction in the markets depending upon the outcome. We firmly believe that the results of state elections do not matter much for the stock markets for the long term.”

4) Sanjiv Bhasin, executive VP-Markets & Corporate Affairs, IIFL Securities, says: “Any correction may be gradually bought into as markets will discount state election results as macros are improving for India.” Global oil prices are down from around $86 a barrel in October to around $60 now. This had sparked a 5% rally in Nifty in November.

5) Rahul Sharma, senior research analyst at Equity99, said investors should stay cautious ahead of the outcome of state elections. On the economic front, industrial production data for October and retail inflation data for November will be declared on Wednesday.

6) Asian markets slid today, extending their recent slide on worries over slowing global growth and fears that a fresh flare-up in tensions between Washington and Beijing could quash any chances of a trade deal. MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.7%, falling to a two-week low.

7) Global markets were already reeling on news last week that Canadian officials had arrested the chief financial officer of Chinese smartphone maker Huawei for extradition to the US. The arrest was seen as an added threat to the resolution of a trade war between the world’s top two economies.

8) White House trade adviser Peter Navarro’s comments that US officials would raise tariff rates on Chinese imports if the two countries could not come to an agreement during a 90-day negotiating period fanned fresh concerns over US-China trade relations.

9) Data released over the weekend showed China reporting far weaker than expected November exports and imports, underscoring concerns over slower global growth.

10) Further adding to concerns for the Indian markets, oil prices rose today, extending gains from Friday when producers club OPEC and some non-affiliated producers agreed a supply cut of 1.2 million barrels per day (bpd) from January. Brent crude edged up 0.2% to $61.79 per barrel.

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