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Sensex, Rupee fall as US-China trade tensions re-emerge

The rupee fell by 18 paise to close at 69.40 against the US dollar as renewed trade war worries made the forex market nervous.

The rupee and the benchmark Sensex on Monday plunged after US President Donald Trump threatened to raise tariffs on China, triggering a global rout in risky assets.

The rupee fell by 18 paise to close at 69.40 against the US dollar as renewed trade war worries made the forex market nervous.

The BSE gauge Sensex opened on a weak note at 38,719.33 against its previous close of 38,963.26 and lost further ground as the trade progressed and hit a low of 38,509.79 during the day before finally settling at 38,600.34, down 363 points or 0.93 per cent.

The broader NSE Nifty started off the session on a bearish note at 11,605.80 and fell to a low of 11,571.35 before settling the day at 11,598.25, losing 114 points or 0.97 per cent.

Trump on Sunday said he would raise tariffs on $200 billion worth of Chinese goods this week and target hundreds of billions more soon. On Friday, he had cited good progress in trade talks and praised his relationship with Chinese President Xi Jinping.

“Everyone expected talks were heading in the right direction and almost close to finishing. This was totally out of the blue and the reaction is that we have more risk aversion today,” said an analyst. Besides, the rupee fall and mixed quarterly results further hit the investor’s sentiment in the domestic equity market.

In the Sensex pack, private sector lender Yes Bank emerged as the top loser with 5.30 per cent fall after ratings downgrade. Other major laggards were Tata Motors, Bajaj Finance, Tata Steel, HDFC and IndusInd Bank with losses up to 4.49 per cent.

Sectorally, BSE consumer durables, metals, realty, capital goods and auto indices fell up to 2.82 per cent. The broader BSE midcap and smallcap indices too ended up to 0.85 per cent lower.

Vinod Nair, head of Research, Geojit Financial Services, said, “Markets slid as unexpected threat to US-China trade tariffs influenced investors to book profit. Weak rupee and mixed bag of quarter results further impacted the sentiment while consolidation in oil prices and 10-year yield are the positive triggers for the Indian market. Any further escalation in trade tensions may impact the flow of foreign funds to the domestic market which may lead to sideways movement in the near term.”

Weak Rupee, mixed bag of quarterly results also impact sentiment

Markets slid as unexpected threat to US-China trade tariffs influenced investors to book profit. Weak rupee and mixed bag of quarterly results further impacted the sentiment while consolidation in oil prices and 10-year yield are the positive triggers for the Indian market, analysts said. Chinese bourses sank led by Shanghai Composite Index that plunged 5.58 per cent. Benchmark indices of Japan, Hong Kong and South Korea also witnessed sharp declines. European equites were also trading significantly lower in early trade.

“Indian markets ended the day on sharp note with the Index closing around 114 points in the red. The fall in the markets was mainly due to US President Donald Trump planning on doubling the tariff rate on $200 billion of Chinese goods,” said Hemang Jani, head – advisory, Sharekhan by BNP Paribas.

Asian markets remained under pressure owing to fresh concerns over US-China trade talks.

Chinese bourses sank led by Shanghai Composite Index that plunged 5.58 per cent. Benchmark indices of Japan, Hong Kong and South Korea also witnessed sharp declines. European equites were also trading significantly lower in early trade.

“The worsening situation has put the entire world in a state of flux where even a tiny escalation can cause big damage. If the US continues to impose further restrictions on free trade flow with China and sanctions on export of Iranian oil, these actions will turn all the other economies against them,” said Umesh Mehta, head of research, Samco Securities.Gold and Japanese yen, considered as safe haven investment in times of crisis, gained Monday while Chinese currency yuan fell to the year’s low level against the dollar.

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