The NSE Nifty cracked below 8,100-level by falling 79.10 points or 0.96 per cent to 8,090.95.
Tracking lower global markets, domestic markets on Monday fell for a third consecutive session on renewed worries about the impact of Britain’s June 23 referendum on whether to leave the European Union and about upcoming central bank meetings. The benchmark BSE Sensex which joined the sell-off in Tokyo, Hong Kong and Shaghai ended down 239 points to settle at 26,396.77 and the Nifty-50 closed 59 points lower at 8,110.60.
On the other hand, extending losses against the US dollar for the third day, the rupee also plunged by 38 paise to hit one-week low of 67.14 on demand for the US currency from banks and importers in view of sharp fall in domestic equities. The rupee has dropped 49 paise or 0.74 per cent in the last three days. The rupee had last ended at 67.25 per dollar on June 3, 2016.
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Asian markets plunged as worries about a potential exit by Britain — or Brexit — from the European Union left investors scrambling for safe haven assets. Japan’s Nikkei Stock Average posted its steepest loss in six weeks. It closed down 3.5 per cent, leading losses in Asia. Shares are down nearly 16 per cent since the beginning of the year. The Shanghai Composite Index slid during the afternoon session to end down 3.2 per cent. Hong Kong’s Hang Seng Index plunged 2.7 per cent and South Korea’s Kospi declined 1.9 per cent.
The US Federal Reserve will announce a decision on interest rates on Wednesday. While the bank isn’t expected to increase rates, investors are watching closely for how hawkish or dovish Chairwoman Janet Yellen’s tone will be. According to analysts, traders see only a 2 per cent likelihood the US Fed will raise rates on Wednesday, and 21 per cent chance it will do so at its July meeting. Expectations fell significantly after a dismal employment report earlier this month set off fresh concerns about the US economy’s strength.
Dipen Shah, Senior Vice President, Kotak Securities, said, “markets started the week on a weak note, impacted by the weak global markets.
Going ahead, markets will look at important events such as the Fed meeting this week and the referendum in Britain on whether to stay in EU or not. The Britain referendum has created concerns with some polls showing a bend towards ‘Leave’ over ‘Stay’. A ‘Brexit’ scenario has the potential to create volatility in global markets, especially in the currency markets.” Apart from these, timely progress of the monsoons will be a positive for the markets, he said.
Shreyash Devalkar, Fund Manager, BNP Paribas, said, “weakness in global stocks and poor industrial production data for April 2016 dampened the market enthusiasm and kept value investors at bay.” Data released after market hours on Friday showed that India’s industrial production (IIP) contracted by 0.8 per cent in April 2016 with the manufacturing sector dipping by a sharp 3.1 per cent. While pharma and media stocks posted marginal gains, all other sectoral indices traded in the red. Banking and metal stocks came under severe selling pressure from the bears.
According to Jayant Manglik, President, Religare Securities, Nifty edged lower on
Monday and lost over half a percent, in reaction to weak IIP figure and feeble global cues. It started with downside gap and slipped further in the first half of the trade. However, rebound in select index majors pared intraday losses marginally in the second half.
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