Indian markets fall for the third day over border tension, global pressure

Mumbai: Indian markets fell for the third straight session with the benchmark indices losing nearly 1% on Monday as global pressures and reports of India-China border tension dented investor sentiment. In the last three sessions, the Sensex has fallen 3% after hitting 50,000 intraday on Thursday.

The BSE Sensex lost 530.95 points or 1.09% to end at 48,347.59. The Nifty slipped 133 points or 0.93% before closing at14,238.90.

“Indian markets witnessed a highly volatile trade and closed in red due to weak global markets and reports of Indo-China border tension. Policy decisions of the US Fed meeting which will commence tomorrow will drive the global market in the coming days. We have seen Indian markets being highly volatile these days and this trend is expected to continue this week as we inch closer to the Union budget,” Vinod Nair, Head of Research at Geojit Financial Services said.

Indian and Chinese troops were engaged in a face-off at Naku La area in north Sikkim last week, with the Indian Army on Monday describing the incident as “minor” which was resolved by local commanders according to Mint.

Stocks in other Asia-Pacific markets were mixed as investor focus remained on the covid-19 pandemic. Hong Kong’s Hang Seng index led gains among the region’s major markets as it rose 2.41%, South Korea’s Kospi was 2.18% higher, China’s Shanghai composite was 0.48% higher while Japan’s Nikkei 225 was up 0.67%. European markets were mostly lower.

US President Joe Biden will impose a ban on most non-US citizens entering the country who have recently been in South Africa starting Saturday in a bid to contain the spread of a new variant of Covid-19, a senior U.S. public health official told Reuters. Biden on Monday is also reimposing an entry ban on nearly all non-US travelers who have been in Brazil, the United Kingdom, Ireland and 26 countries in Europe that allow travel across open borders.

“Technically, Nifty has started to form lower top – lower bottom and is witnessing profit booking declines from three sessions. Going ahead, markets may continue to remain highly volatile ahead of Monthly expiry and Union Budget 2021. The ongoing earning season further adds to the volatility. The Fed monetary policy is also due this week which would be the first one post newly inaugurated US President and thus would hold lot more significance,” Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services said.

India volatility index or VIX jumped 4% on Monday indicating there could be some corrections in near-term. Analysts said that the volatility in markets is likely to continue before the Union budget is presented on 1 February.

As covid led disruptions continue, the government’s focus in the Union Budget is likely to remain on growth with clear focus on capex revival and manufacturing, boosting healthcare and sanitisation, said analysts. “While FY22 real and nominal GDP is likely to bounce back at 10% and 15%, respectively, it will have an advantage of low base of FY21. Hence, for sustained long-term growth, we expect the government to push for bigger reforms like PLI schemes to make India a preferred destination for manufacturing,” said ICICI Direct in a report on 25 January.

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