Trade war, OPEC crude stance keep markets on edge

Elections herald volatility not just on account of political uncertainty, but also possible slowdown in projects, spending and economic growth.
OPEC logo used for representational purpose. (Photo | Reuters)
OPEC logo used for representational purpose. (Photo | Reuters)

MUMBAI:  As the G-20 bonhomie waned and global markets worried once again about the US-China trade tensions, and crude markets weighed in OPEC signal on production cuts, Indian equities and rupee fell giving away some of the recent gains. BSE Sensex closed 1.6 per cent lower at 35,312 and NSE Nifty down 1.7 per cent lower at 10,601. Rupee fell by 44 paise against the US dollar to close at `70.90.

While global factors like trade war, Fed rates and Brexit outcomes would dominate the sentiment of the world economy in 2019, Indian economy would face challenging next six months in the run-up to the general elections, pointed out Kamlesh Rao, managing director and CEO, Kotak Securities. Rao has given an outlook of Nifty performing within the range of 10,000 to 13,000 by next December. But what is of immediate concern for the markets are the state election results expected next week.

Elections herald volatility not just on account of political uncertainty, but also possible slowdown in projects, spending and economic growth. RBI had Wednesday said it retains the GDP growth target for the fiscal at 7.4 per cent, but with risks to the downside. Global ratings agency Fitch, on the other hand, lowered its GDP forecast to 7.2 per cent from 7.8 per cent projected in September on credit issues and financing cost.

“The markets posted their biggest single day fall since October 11.The markets will be under pressure ahead of the state election results and global sell-offs in equity markets,” said Akriti Soni, Research Analyst, Choice Broking. Fall in share prices were across the board, and for reasons ranging from vehicle price hikes hitting auto companies to worries on shrinking bank margins hitting financials.

Even as signals from the global oil producers cartel OPEC meeting in Vienna was confusing, the oil markets took 1 million barrels a day cut suggested by the Saudi Arabia’s oil minister as less than satisfactory, pulling the Brent crude close to $60 a barrel. If the consensus on production cut eludes OPEC and crude prices stay low, that is at least one positive on the economic front for India. The currency and equity markets would keep a watch on that closely.

MSIL scrip down 4% 
New Delhi: Shares of Maruti Suzuki India Ltd Thursday tumbled over 4 per cent after the company announced price hike across various models. The scrip fell 4.63 per cent to close at I7,209.7 on the BSE. Intraday, it hit a low of I7,178.3, a decline of 5.04 per cent. On the NSE, the stock fell 4.67 per cent to settle at I7,201 apiece. The shares hit a low of I7,180 and a high of I7,486.30 in the intraday trade. 

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