The Indian stock markets continue to bear the impact of huge selling as the Nifty index has lost more than 4% in the last five sessions, while the Sensex has tumbled 4.3%.
Nifty opened 68.20 points or 0.27% lower at 25,181.90 on Friday. The Sensex fell 252.85 points to 82,244.25, which accounts for a fall of 0.31%.
Experts say several reasons are contributing to this fall in investor confidence. Growing geopolitical tension between Iran and Israel is considered a strong point of concern. Yet, foreign off-shore investments indicate a shift from India towards China and Hong Kong. The recent circular issued by SEBI has further deteriorated these negative sentiments.
Ajay Bagga, a banking and market expert, expressed his views on the situation: “Global markets may see tension this weekend.” He mentioned that crude oil jumped 5% in the past week on geopolitical risks. China might be shut down for a week on October 8, but there is heavy FII outflow from India. Bagga wonders how much of this is due to general market caution regarding the Israel-Iran situation and how much is a reallocation to Chinese markets.
He also added, “Recent SEBI moves on derivatives trading and margin tightening are hurting market activity.” He explained, “Derivative volumes are already 15% off.”
Nikhil Kamath of Zerodha estimates that the regulatory changes may hurt about 60% of market volumes. Bagga warns that if the Israel-Iran conflict escalates, it could disrupt OPEC production and its transportation.
Sectoralwise, the biggest loser was Nifty Consumer Durables, which plunged 0.53% in the morning session. Other losing sectors included Nifty Bank, down 0.39%, and Nifty IT, which declined 0.19%.
Meanwhile, other Asian markets took a different cue: Hong Kong’s Hang Seng index jumped to surge above 2% on Friday. The Nikkei 225 in Japan rose 0.26%, while in South Korea, the KOSPI inclined 0.38%. The market in Taiwan edged down by 0.14%.
Selling pressure also appeared in the markets of the U.S. The Nasdaq and S&P 500 finished lower on Thursday by 0.04% and 0.17%, respectively. A very clouded outlook now hangs over the Indian markets amid these geopolitical tensions and regulatory changes.
-ANI