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Markets fell on trade escalation fears

  • On NSE, 42 scrips out of 50 ended negative
  • Indices fell for the third sessions on geopolitical concerns and slowing global growth

Mumbai: Benchmark Sensex and Nifty indices on Friday slumped nearly 0.7% after India imposed tariffs on 29 US products, that analyst expects may increase trade tensions.

The Sensex closed 0.73% or 289.29 points lower at 39452.07 points, while the NSE Nifty 50 index fell 0.76% to 11,823.30 points. So far this year, the Sensex and Nifty have risen 10% each.

Markets fell for the third sessions in a row, due to concerns of geopolitical risks and slowing global growth. Investors are awaiting next week's federal reserve review and the upcoming group of 20 summit.

Investors were also cautious due to rise in crude oil prices as attacks on tankers in gulf of Oman escalated US-Iran tensions and raised concerns over supply flows.

The broader market also ended in the red with BSE Midcap and Smallcap tanking 1.06% and 0.76% respectively.

IndusInd Bank, Tata Motors, Bharti Airtel, Axis Bank and Kotak Mahindra Bank were the biggest laggards on Sensex falling as much as 4.36%.

On NSE, 42 scrips out of 50 ended negative.

All sectors compiled on NSE ended the day negative with Nifty Media (-2.24%) taking the pole position followed by Nifty Realty (-2.10%), Nifty Private Bank (-1.35%) Nifty FMCG (-1.28%) and Nifty Bank (-1.17%).

"Ripple effect from a weak global market while premium valuation & slow economy is hurting the market. The continuous exchange of words between the US and Tehran regarding the oil tanker attack, progress of the US-China trade-war, fed policy outcome on 19th June and progress of monsoon will be closely watched by the investors. The market is cautious today awaiting these important events while companies highly leveraged are being most impacted," said Vinod Nair, head of research,Geojit Financial Services.

India has decided to impose the long pending retaliatory tariffs on 29 US products after Washington last week withdrew duty-free benefits for Indian exporters. On 1 June, US President Donald Trump removed India from a list of countries that receive special trade privileges because it hasn’t done enough to open its markets to US companies.

Data on China’s industrial output showed that the growth slowed to the weakest pace since 2002, dampened sentiment, as it grapples with the tariff war with the US. President Donald Trump is still waiting for a response from Chinese President Xi Jinping about meeting to restart trade talks.

(Bloomberg contributed to this story)

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