Markets sink on overseas cues, RIL-Amazon clash

Markets across the globe are in the risk-off mode and Indian equities fell in tandem on Monday. The reimposition of lockdowns and lack of cues with respect to the US fiscal stimulus saw investors selling equities. The Sensex plunged 540 points (1.33%) to close at 40,145.5. Similarly, the Nifty50 declined 162.2 points (1.36%) to close at 11,767.75.

Monday’s market meltdown was mainly because of the decline in the Dow Jones Mini Futures and European markets. Both the US and parts of Europe are seeing a spike in Covid cases and are going through the second wave. Countries such as Spain and Italy reinforced lockdowns because of rising cases. The bourses in France, the UK and Germany were down between 0.4% and 2.05%.

The Asian markets in Japan, South Korea and China too closed lower. Foreign portfolio investors have been buyers so far in October, pumping in $2.3 billion in equities whereas domestic institutional investors sold stocks worth Rs 15,147.66 crore. Sorbh Gupta, associate fund manager, Quantum Mutual Fund, said: “If two or more sectors start showing signs of slowdown, then it would be difficult for the markets to rise further. The markets, till a couple of weeks back, were factoring in perfection in recovery with auto stock prices reaching their 52-week highs.

“If that perfection in recovery does not happen, stock prices will fall. Additionally, no further fiscal stimulus,the rising Covid-19 cases as well as the movement in US dollars would determine the course that the EM equities can take.”
On the domestic front, index heavyweight RIL, being one of the laggards on the Nifty during the day’s trading session, pulled the index down.  Shares of RIL declined 3.7% to close at Rs 2034.9 apiece.

The stock saw a price correction after the Singapore International Arbitration Centre asked Future Group to keep its plans to sell its retail business to RIL on hold. This hurt the investor sentiment and caused a sell-off in the stock.
Siddhartha Khemka, head — retail research, Motilal Oswal Financial Services, said, “On the domestic side, Reliance Industries was the biggest drag among Nifty companies as investors feared it may not be able to complete the acquisition of Future Group assets, since the Singapore arbitration panel has put its deal on hold…”

The turnover on the futures and options segment, according to NSE, stood at Rs 18.29 lakh crore whereas, the cash market witnessed volumes of Rs 49,691.6 crore. This is against the six month average of Rs 16.78 lakh crore and Rs 56,614 crore, respectively.