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Benchmark indices slide amid concerns over Indo-US trade tensions

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The benchmark indices continued their fall on Friday, dragging losses to the second week amid worries over the Indo-US trade tensions.

On Friday, reports said India might impose retaliatory tariffs on 29 US products, after the latter withdrew incentives to Indian exporters under its Generalised System of Preferences (GSP) programme.

The government had decided to impose these duties last year, in retaliation to the US’ decision of significantly hiking customs duties on certain steel and aluminium products, but had kept extending the deadline.

The Sensex ended the session at 39,452, a decline of 289 points or 0.73 per cent, while the Nifty fell 91 points to end the session at 11,823.30.

Following Friday’s correction, both indices have fallen 1.2 per cent over the last three sessions. The indices incurred most of the losses during the last hour of trade, when reports of India’s retaliatory tariffs surfaced.

Benchmark indices slide amid concerns over Indo-US trade tensions
Market experts said India’s reaction was unexpected and there is uncertainty among investors regarding trade tensions. “If tensions escalate, we will have to grapple with issues of trade, in addition to domestic issues of a slowdown in demand and the liquidity crunch,” said Abhimanyu Sofat, vice president (research), IIFL.

Investors are concerned about slowdown in the economy and debt defaults. Market players said a big upmove in the markets will depend on policy action by the government to revive economic growth and corporate earnings. They said there is hope of a stable government bringing continuity in reforms and quick action to reverse the slowdown.

“Investors are expecting some policy impetus for economic revival — either in the budget or during the first 100 days of the new government. Valuations are not comfortable and the market is trading at the higher end of the valuation range. There is little room for an upside. Markets will be disappointed if there is no earnings revival,” said Siddhartha Khemka, vice-president and head (research), Motilal Oswal Financial Services.

Eighteen of the 19 sectoral indices of the BSE fell, with the realty index declining the most. Barring five, all stocks in the Sensex pack fell.

IndusInd Bank fell the most (4.36 per cent), followed by Bharti Airtel (2.74 per cent). Axis Bank and Kotak Mahindra Bank fell over 2 per cent. Foreign portfolio investors sold equities worth Rs 238 crore, while domestic institutional investors bought shares worth Rs 376 crore.

Source: Maalaimalar