Shares see biggest fall in 7 months as selling resumes

Investor confidence in Indian stocks collapsed as Reliance Industries Ltd scrapped plans to sell a $15 billion stake in its oil-to-chemicals unit to Saudi Aramco, the government repealed agricultural laws, and India’s most One of the hot startups continued to hold shares of Paytm. There has been a decline since the company hit the market last week.

On Monday, shares opened with little change, but fell soon after, marking a fourth straight session. Selling was seen across all sectors except metals, with most sectors falling between 2% and 4%. The India VIX, or the fear gauge, rose 17.9% to the 17.5 level. An index is a measure of market volatility.

The shocks come as stocks around the world feeling the heat of inflationary pressures, raising concerns that the US central bank may raise interest rates faster than expected, and a resurgence of Covid-19 cases in Europe. Analysts also expect the Reserve Bank of India to take policy normalization measures in October amid higher-than-expected inflation.

The BSE Sensex closed 1,170.12 points or 1.96% lower at 58,465.89, the sharpest daily decline since April 30. The Nifty index of the National Stock Exchange also closed down 1.96% at 17,416.55, the biggest fall since April 12. Sensex fell up to 2.72% in intraday trading, while Nifty lost 2.73%.

Mohit Nigam, head of portfolio management services at Hem Securities, said while the closure of the Reliance-Aramco deal and Paytm’s disappointing listing dented investor sentiment, the roll-back of agricultural laws cast doubt on the government’s commitment to economic reforms. Is.

Reliance was the biggest pressure on the Sensex, which was down 4.4% till the end of the day.

Paytm has lost around 37% in its first two trading sessions, which are over 51,194 crore investors’ assets. The disappointing start has focused attention on the rich valuations of the Indian stock market.

Analysts said rising inflation, as well as the escalation of the pandemic in Europe, contributed to the market recovery. Germany and Austria have partially gone into lockdown, and the spread of infection even after widespread vaccination is a cause of concern for the World Health Organization.

“Globally, the stagflation scenario and re-emergence of COVID infections in major countries are putting economic recovery at risk. Rajnath Yadav, Analyst at Choice Broking said, “Given the weakness in the broader market, we feel that the current downside momentum may continue in the near term, but downside looks limited.

Investors are now watching global economic data for release this week and next week. India’s GDP for the third quarter will be released on 30 November. A Bloomberg survey of economists expects India’s GDP at 8.6% for the September quarter.

Globally, the US and the Eurozone will release manufacturing and services data on Tuesday. Further data from the US, including the latest Fed meeting and jobless claims, will be released on Wednesday ahead of the Thanksgiving holidays.