September 27, 2016 1:08:28 am
Domestic stock markets on Monday plunged 1.30 per cent, declining for a second straight session, as caution prevailed in global markets ahead of the US presidential debate that will pit Donald Trump against Hillary Clinton
With caution setting in, the Sensex fell 374 points to close at 28,294.28, after posting its biggest intraday percentage fall in the last two weeks. The NSE Nifty Index lost 1.23 per cent to 8,723.05.
Overseas stocks were lower as investors moved cautiously ahead of an OPEC producers meeting in Algeria this week. Asian stocks dropped after losses on Wall Street on Friday as investors’ attention turned from central banks to American politics ahead of the first US presidential debate. Investors were also pessimistic over any breakthroughs in oil-production cuts when the OPEC gathers for an informal meeting on Wednesday.
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Dipen Shah, senior vice president, Kotak Securities, said: “Markets fell in line with the fall in the US markets on Friday and the weak European and Asian markets today. Global markets were weak following weak data across US and Europe. Crude prices have also fallen on indications that there may not be a deal to freeze output at the OPEC meeting.”
The important triggers for the market in the next few weeks will be the meeting of OPEC members this week and the RBI meeting early October, which will be closely watched for any rate cuts. “CPI inflation has cooled off to near 5 per cent in August 2016 and that, along with the fall in IIP, has raised hopes of a rate cut in the ensuing RBI meeting. Despite relatively higher valuations, markets have been resilient, largely on the back of consistent global flows,” he said.
According to Jayant Manglik, president, Religare Securities, apart from anxiety over expiry of derivatives, participants were maintaining caution citing global markets condition ahead of first US presidential debate. The meeting of OPEC members might result in a breakthrough in oil production cut, further weighing on the sentiment. “Such slides are normal in broader consolidation phase and especially when the news flow is high. We feel this scenario will prevail in near future,” Manglik said.
Shreyash Devalkar, Fund Manager, BNP Paribas Mutual Fund, said markets in the US traded weak as investor focus now shifts from central banks to the impending presidential elections in the US. With the exception of the media and metals indices, all other benchmark indices on the National Stock Exchange traded in the red, with the banking, auto and FMCG indices losing over 1.5 per cent.
Meanwhile, the rupee ended four paise higher at 66.61 on sustained selling of the American unit by banks and exporters. Besides,dollar’s weakness against other currencies overseas on the back of prevailing state of uncertainty over the pace of Fed rate hike alongside robust capital inflows supported the domestic currency to sustain its momentum.
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