From around 1,700 points down as the day began, the Sensex recovered to end the day 338 points at 27,252. In a day of wild swing, the Sensex staged a big pullback of about 1350 points from its lows after America elected Republican Donald Trump as its next President in a big upset.
As it opened, the Sensex crashed 1,689 points or nearly 6 per cent today, wiping out in minutes, Rs. 6 lakh crore in investors’ wealth on Dalal Street in market capitalisation of BSE listed firms.
Global markets were spooked in the morning by the unexpectedly powerful performance of Donald Trump, who built upon an early lead to defeat Democrat Hillary Clinton.
While the markets were seen to favour a Clinton win as that would mean a continuity in US policy, analysts said the strong recovery of the Sensex in afternoon reflected relief that the uncertainty over the US election had ended.
European stock markets and Wall Street futures have trimmed a chunk of their early losses after a relatively soft victory speech from US President-elect Donald Trump. S&P 500 futures, which had earlier sank as much as 5 per cent, recovered partially to trade 2 per cent lower in recent trade. Major European markets were down around 1 per cent in recent trade.
Kathleen Brooks, research director at Forex.com, said Trump “definitely sounded more presidential than he has done at any stage during the election campaign” during his victory speech, in which he praised Hillary Clinton.
Brooks said the speech has helped soothe stressed markets.
The early crash in Indian markets has also been attributed by analysts to short-term disruption in the financial system caused by the government’s abrupt announcement on Tuesday evening that 500 and 1,000 rupee notes will be discontinued.
Nearly 40 per cent of India’s economy is driven by small- and medium-sized enterprises that largely run on cash transactions. Economists said Prime Minister Narendra Modi’s demonitisation move on Tuesday evening could impact these businesses, and in turn have a knock-on effect on economic growth.
Among Nifty basket of stocks, 38 stocks ended lower while 13 stocks ended higher. Strong buying was seen in some pharma stocks with Dr Reddy’s and Sun Pharma surging 4-5 per cent. Real estate stocks suffered big losses following the government’s measures to clamp down on the black money.
According to experts, demonetisation of Rs. 1,000 and Rs. 500 notes are likely to hit property market.
Among the major losers in real estate back, DLF slumped 17 per cent while Unitech fell 8 per cent.
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