Indian stocks markets witnessed strong selling pressure on Friday, with the Sensex falling over 400 points. The Nifty also slumped below 9,700 at day's low. The selloff was led by state-run banks after SBI, the country's biggest lender, reported worsening of asset quality in the June quarter. However, consolidated net profit of SBI jumped nearly three times to Rs 3,032 crore against Rs 1,046 crore in the year-ago quarter. The recent selloff has wiped over 1,100 points off Sensex in just four days. Weak global markets, some earnings disappointment and profit-taking weighed on the Indian markets. The rupee has also come under pressure, falling to two-week low of 64.27 against the US dollar. The rupee had closed at 64.08 against the dollar on Thursday.
10 Things To know about Sensex, Nifty selloff:
1) Analysts said Indian markets were vulnerable to a selloff after the strong rally this year which drove Sensex and Nifty to record highs. Despite the recent correction, the Sensex is up around 17 per cent year to date.
2) Meanwhile, Asian equity markets extended a global slide on Friday as tensions ramped up between the United States and North Korea, sending investors fleeing to less risky assets such the yen, the Swiss franc and US Treasuries.
3) Overnight, Wall Street closed sharply lower after US President Donald Trump issued a new round of fiery rhetoric, warning Pyongyang against attacking Guam or US allies after it disclosed plans to fire missiles over Japan to land near the US Pacific territory.
4) "What has changed this time is that the scary threats and war of words between the U.S. and North Korea have intensified to the point that markets can't ignore it," said Shane Oliver, head of investment strategy at AMP Capital in Sydney. "Of course it's all come at a time when share markets are due for a correction so North Korea has provided a perfect trigger."
5) Back to the domestic markets, the NSE Volatility Index, the most widely followed barometer of expected near-term stock market volatility, rose 12 per cent to its highest level in over 6 months, reflecting the jitteriness among investors.
6) Rahul Shah, VP- equity advisory at Motilal Oswal Securities, said, "Indian markets took a breather after a long three months. This was in sync with the global markets. The main reason for the selloff was couple of things - geo-political tensions and weak quarterly performance reported in last few days." He remains positive on Indian markets, saying "good monsoon , improving macroeconomics and GST all augurs well for the market".
7) Sameet Chavan, chief analyst at Angel Broking, advised caution in the near term, saying that domestic markets are likely to remain under pressure and any intra-day bounceback could be sold into. "Traders are advised to remain light and avoid taking undue risks as individual stocks may continue correcting in next few days," he said.
8) The selling pressure in the Indian markets was broad-based today with all the sectoral indices on the BSE trading in the red. Banking, metal, capital goods stocks led the fall.
9) Among the Nifty50 stocks, Hindalco was the top loser, down 7.14 per cent.Vedanta and SBI also fell over 5 per cent each to be the second and third biggest loser in the index. SBI shares closed nearly 6 per cent lower at Rs 280.15 on NSE after its bad debts ballooned in the June quarter. SBI's gross bad loans as a percentage of total loans was 9.97 per cent at the end of June quarter, higher from 9.11 per cent three months earlier and 7.40 per cent at the end of June last year.
10) BSE midcap and smallcap indices however recovered some ground and settled 0.20 per cent and 0.04 per cent lower respectively. The Sensex finally closed 317.74 points lower at 31,213.59 while Nifty settled 109.45 points or 1.11 per cent lower at 9,710.8.