Sensex & Nifty Slump Over 1% as Trump Win, Note Ban Spooks Markets
The markets remained deep in the red during most of the trading hours but finally recovered towards the fag-end.
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- Government scraps Rs 500 and Rs 1,000 currency notes
- The stock markets were expected remain open, and clearing and settlement systems will operate normally, exchange official said.
- Indian shares dropped after Narendra Modi’s unexpectedly pulled out high-denomination banknotes.
- Realty stocks plunged up to 20 percent in early trade on Wednesday
- New high-security Rs 500 and Rs 2,000 currency notes are going to be available in ATMs from 11 November
- Rupee falls 28 paise against US dollar to 66.90 in late morning trade on Wednesday
The Indian equity markets remained deep in the red during most of the trading hours on Wednesday, but finally recovered towards the fag-end to close lower by slightly more than a percent.
Following global cues, as also domestic developments, key Indian indices had reacted adversely to the victory of Republican candidate Donald Trump in the US presidential election and the government's decision on Tuesday evening to demonetise Rs 500 and Rs 1,000 currency notes.
After crashing 1,688 points, or 6.12 percent, in early trade on Wednesday, the Sensex regained a large part of the losses to close lower by around 338.61 points, or 1.23 percent, at 27,252.53 points against the previous close of 27,591.14 points.
At the National Stock Exchange, the Nifty closed at 8,432 points, down 111.55 points, or 1.31 percent.
Indian Stocks Crash as Trump Wins
Donald Trump pulled off a huge electoral upset to become the 45th president of the United States, a repudiation of the political establishment that’s jolting financial markets even as it promises to reshape the nation’s priorities and America’s relationship with the world.
Odds on the Fed hiking next month have plummeted to as low as 47 percent - that's from 82 percent at the end of trading in New York on Tuesday.
Gold Surges to Hit Three-Year High
Gold zoomed Rs 900 to hit three-year high of Rs 31,750 per ten gram in the national capital after Donald Trump was declared the President.
Gold surges Rs 750 to a hit 6-week high of Rs 31,600 per 10 gram on black money crackdown and the US election trends.
The black money crackdown and Trumps victory has resulted in many companies to win, while some other lost.
Trump as President Would Mean Gold’s Going Higher
A Donald Trump victory in the US presidential election in November would probably lift gold prices, according to the mint that refines almost all the bullion output from one of the world’s biggest producers.
“If someone like Donald Trump does get himself elected, it will stimulate some fear within the economy as to where things are going,” Richard Hayes, chief executive officer of the Perth Mint, said in a Bloomberg TV interview.
Rupee Dives 28 Paise vs Dollar
In line with equities, the rupee plummeted further by 28 paise to 66.90 against the US dollar in late morning deals on government's move to withdraw higher-denomination currency notes compounded with US election trend.
The domestic currency opened lower at 66.70 as against yesterday's closing level of 66.62 per dollar at the Interbank Foreign Exchange (Forex) market.
Later, it spiralled downward and languished between 66.90 and 66.70 during morning deals, it was still quoting 66.90 at 10:45 am.
Meanwhile, the Dollar Index was dropped by 2.06 percent at 95.91 against a basket of six currencies in the early trade.
RBI Website Crashes
The Reserve Bank of India website seemed to be down on Wednesday morning.
New Notes to Be Available From 11 November
New high-security Rs 500 and Rs 2,000 currency notes are going to be available in ATMs from 11 November, Finance Secretary Ashok Lavasa said on Wednesday.
RBI is going to closely monitor fresh notes that would be issued, he added.
The Revenue Secretary also gave a statement on the withdrawal of higher-denominations notes and said that a lot of money otherwise lying unused will now come into formal economy.
He added that the cash withdrawal restrictions will become easier once supplies of new Rs 2,000 and Rs 500 notes improve.
Jewellery Stocks Decline
- Titan (-15 percent to Rs 315)
- Tribhovandas Bhimji (-19.4 percent to Rs 63)
- Rajesh Exports (-6.6 percent to Rs 436)
- Gitanjali Gems (-20 percent to Rs 56)
- Manappuram Finance (-20 percent to Rs 82)
- Muthoot Finance (-20 percent to Rs 290)
Market Update
- S&P 500 Futures fall 5 percent, trigger CME curbs barring more losses.
- Fed December rate hike odds drops below 50 percent, according to Bloomberg data.
- Nikkei extends drop to 5.2 percent; Hang Seng down 2.8 percent
- WTI crude down 3.9 percent to $43.2 a barrel; Gold gained 4.5 percent to $1,332 per ounce.
Indian Shares Recover
Indian shares recovered some of their opening losses after Clinton overtook Trump after winning California.
The Sensex recovered 3.5 percent from the day’s low, but was still down 2.8 percent at 26,857. The 50-share Nifty is down 2.7 percent to 8,300, after falling as much as 6.3 percent in opening trade.
Real Estate Shares Tumble 20 Percent
Realty stocks plunged up to 20 percent in early trade on Wednesday with scrips of Unitech and DLF.
In initial trade, Unitech tumbled nearly 20 percent while DLF dropped over 13 percent before making a slight recovery.
While Unitech was trading at Rs 4.75, DLF was down at Rs 126. Among other scrips, Prestige Estates Projects too shed 17 percent to Rs 153.25, Sobha Developers declined over 11 percent to Rs 240 and Godrej Properties slumped 7 percent to Rs 333.
The benchmark 30-share Sensex crashed over 1,500 points in opening trade before making up some of the lost ground but was down by more than 660 points at 26,928.70 points later.
Opening Bell
The S&P BSE Sensex declined 6.1 percent to 25,902 while the NSE Nifty lost 6.3 percent to 8,002. The market breadth was abysmal at 1,448 declines, 69 advances and 325 stocks remaining unchanged.
Shares are tumbling across Asia, with the Nikkei 225 index in Tokyo down 4.4 percent at 16,410.55, as Trump seemed to be leading.
The dollar has plunged against the yen, dropping to 101.99 yen from 105.46 yen earlier in the session.
The Mexican peso has also fallen 10.7 percent to 20.32 pesos to the dollar.
Pre-Market Update
The S&P BSE Sensex dropped 4.8 percent to 26251 while the Nifty slumped 5.5 percent to 8,067.
Rupee fell 23 paise against US dollar to 66.85 in early trade on Wednesday after the crackdown on black money.
Sensex crashed 1,340 points, while Nifty plunged 476 points in pre-open session, as the government’s move to abolish high-denomination banknotes are seen hurting shares of property developers, jewellery makers, reported BloombergQuint.
PM Modi Scraps 500 and 100 Currency Notes
Taking the nation by surprise, Prime Minister Narendra Modi announced demonetisation of Rs 1000 and Rs 500 notes with effect from midnight of 8 November. This step, making these notes invalid, is a major assault on black money, fake currency and corruption.
In his first televised address to the nation, Modi said people holding notes of Rs 500 and Rs 1000 can deposit the same in their bank and post office accounts from 10 November till 30 December.
Banks Stay Close But Stock Market Remains Open
Banks will remain closed tomorrow for the public to allow them time to cope with the government's decision to discontinue existing Rs 500 and Rs 1,000 currency notes with effect from midnight tonight.
However, the stock markets will remain open, and clearing and settlement systems will operate normally, exchange official said.
Sources said that the capital markets regulator SEBI and the stock exchanges have taken necessary steps to safeguard any extreme volatility due to the sudden measures announced by the government to check black money menace and counterfeiting of currency notes.
Marketmen said that the stocks from the real estate and jewellery sectors, which are known to involve huge cash transactions, may be affected in a big way, while the US results would have wider impact on currency, bullion and currency markets, among others.
The regulatory authorities and the exchanges would ensure that systems are in place to keep a check on any manipulative activity taking advantage of huge volatility expected in the markets.
Chaos In Many Places
Unorganised builders and secondary (resale) property market would be adversely impacted, according to real estate developers and consultants.
Modi also announced that new notes of Rs 2000 and Rs 500 will be introduced.
ATM withdrawals will be restricted to Rs 2000 per day until 11 November and will be Rs 4000 per day after that.
The fuel stations will accept the notes till 11 November, while government hospitals will also keep on accepting the currency notes for now. In addition, railway ticket booking counters, airports, milk booths, crematoriums and burial grounds will also accept these notes for the next three days.
He also announced that there will be no change in any other form of currency exchange, be it cheques, DDs, and credit and debit cards.
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