Markets Plunge in Morning Trade After Trump War Speech Fuels Global Risk-Off Sentiment

Mumbai, April 2: Indian stock indices started sharply lower on Thursday morning following the US President Donald Trump’s speech to the nation late Wednesday evening that kicked off a fresh bout of global risk-off sentiment. BSE Sensex dropped 1,400.83 points or 1.92 per cent to 71,733.49 in early trade, and the NSE Nifty declined 448.35 points or 1.98 per cent to 22,231.05, both recording their intraday lows within minutes of opening.

The markets across-the-board were hammered. Out of the indices that are eligible for trading in derivatives, Nifty Next 50 — which acts as a proxy to the rest of the large-cap universe outside the Nifty 50 pack — cracked 2.75 per cent lower, confirming that deep selling spilled over to the broader large-cap stocks.

Nifty Midcap

Nifty Midcap Select Index and Nifty Bank retreated 2.69 per cent and 2.67 per cent respectively, pointing to broad-based pain in mid-cap stocks and banking stocks. Nifty 50 bucked the weaker trend among its peers for most part of the trading session, falling just 1.95 per cent in comparison, though it too plunged along with the rest of the derivative-eligible indices during the session’s last hour.

Smaller markets bore the brunt of the day’s selloff. Nifty Smallcap 100 slid 2.88 per cent, revealing that stocks with smaller market capitalisations were hit hardest during today’s risk-off episode. Nifty Smallcap 50 and Nifty Smallcap 250 also dropped 2.84 per cent and 2.79 per cent respectively, while Nifty Microcap 250 index shed 2.77 per cent, further validating how carnage was the worst at the bottom-end of market-cap spectrum. India VIX climbed 4.85 per cent, indicating a significant increase in volatility.

Sectorally, Nifty Realty index nosedived 3.47 per cent, Nifty PSU Bank fell 3.30 per cent, and Nifty Chemicals tumbled 3.21 per cent, while only Nifty IT was spared from the sharp downside move as IT stocks tend to benefit from a weaker dollar. Nifty IT dipped 0.58 per cent.

Trump Speech

Trump vowed to continue the ongoing US-Israeli military campaign against Iran during his televised speech on Wednesday night, in which he stated that American troops are “closest to finishing” the mission against Iran and threatened “immediate and decisive action” if Iran dared to retaliate.

Asian Markets

Most Asian markets had already plunged deep into negative territory when trading began in India — South Korea’s benchmark KOSPI shed 3.7 per cent, Japan’s Nikkei 225 declined nearly 2 per cent, while Hong Kong’s Hang Seng Index, Taiwan Weighted and Jakarta Composite retreated between 0.9 per cent and 1.4 per cent. India’s export-oriented futures index GIFT Nifty slipped 1.72 per cent prior to the opening bell.

Crude Oil

Global crude oil prices moved sharply higher, with COMEX crude last trading at $105.34 per barrel, up $5.22 or 5.21%. The contract saw strong volatility during the session, hitting a high of $105.51 and a low of $97.50 after opening at $98.92.

Rupee vs Dollar

Indian rupee received an unlikely boost despite elevated geopolitical risks. USD/INR pair declined 1.62 per cent to 93.2475, extending support to the local unit against the greenback — possibly helped by the dollar index trading near the 100 handle itself after closing yesterday’s session at 99.55.

Sources:

• https://www.bseindia.com/index.html
• https://www.nseindia.com
• https://www.reuters.com/markets/asia/