Indian benchmark indices Sensex and Nifty, fell over 1.25% each on Monday due to weak global cues and slow progress in monsoon.
The BSE benchmark Sensex ended down by 491 points at 38,960, while Nifty fell by 151 points to close at 11,672. Sensex touched an intraday low at 38,911.49, while Nifty touched day's low at 11,657.75. Foreign institutional investors (FIIs) pulled out Rs 238.64 crore on a net basis on Friday, provisional data showed.
Here are the five major factors that affected today's trade:
Trade tensions: The ongoing trade war between the United States and China has affected global supply chains. In a fresh development, India on Sunday imposed higher customs duties on as many as 28 US products, in response to Washington's decision to remove certain trade privileges for New Delhi.
Slow progress in monsoon: The market sentiment was also dampened by delay in monsoon which pushed investors to book profits. Monsoon made an onset over Kerala on June 8, nearly a week after its usual onset date. According to the India Meteorological Department, the overall monsoon deficiency in the country has reached 43 per cent due to its sluggish pace.
"The progress of monsoon was halted due to Cyclone Vayu. As its intensity decreases, we expect monsoon to progress in the next 2-3 days," said Devendra Pradhan, additional director general, IMD.
Pre-budget correction: The investor also weighed weak macro data and the government's ability to boost a slowing economy. The newly-appointed Finance Minister Nirmala Sitharaman will be presenting the Modi 2.0 government's first full budget on July 5. One expects this year's budget to set the tone for the government's policy for the next five years.
According to Jagannadham Thunuguntla, Senior VP and Head of Research (Wealth), Centrum Broking Limited, "To change the market sentiment, now lot depends on Union Budget of new finance minister though she has to achieve the take-off with short runway of just 30-35 days post assuming her role. Markets will welcome if Budget can offer any fiscal respite to stimulate the economy (as monetary policy couldn't kindle economy due to lack of transmission)."
Surge in selling across energy and metal sectors: All the thirteen sectoral indices ended in red on Monday, with metal and oil and gas stocks emerging as top losers. Indian Oil Corporation, Reliance Industries, Tata Steel, SAIL, JSW Steel, Vedanta, HPCL, Petronet LNG, and ONGC were among top losers across the sectoral space.
Weak global cues: Negative cues from global equity markets also weighed on market sentiment. Stocks in Asia ended mixed on Monday as investors remained wary ahead of the US Federal Reserve meeting scheduled later in the week. Investors will keep a close eye on the Fed meeting with hopes that the US central bank may lower interest rates soon.
Edited By Rupa Burman Roy