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Sensex Opens 450 Points Down; All Eyes on State Election Results & Urjit Patel's Resignation
Tue, 11 Dec 09:30 am | Rini Mehta, TM Team

Asian stock markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.1% while the Hang Seng is also up 0.1%. The Nikkei 225 is trading down by 0.6%. Wall Street ended Monday's volatile session slightly higher with help from technology stocks although bank stocks tumbled and uncertainty over Britain's exit from the European Union kept investors on edge about global growth.

Back home, India share markets fell in the opening session today as Reserve Bank of India's (RBI) governor Urijit Patel resigned on Monday. That apart outcome of the assembly polls in five states also impacted the sentiment.

The BSE Sensex is trading down by 440 points while the NSE Nifty is trading down by 115 points. The BSE Mid Cap index opened the day down by 0.4% while BSE Small Cap index opened down by 0.5%.

Sectoral indices have opened the day on a negative note with bank stocks and energy stocks witnessing maximum selling pressure.

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The rupee is currently trading at Rs 72.49 against the US$.

The Indian rupee on 10 December tumbled 50 paise to close at 71.32 against the US dollar as nagging worries on global trade war front and uncertain crude prices hurt forex market sentiment.

Besides, the trading pattern in the forex market was impacted by massive sell-offs in domestic equities as investors panicked over exit polls suggesting the Congress giving a tough fight to the ruling BJP in state elections.

The rupee opened lower at 71.28 against the US dollar and dropped further to 71.44. The Indian unit hit a high of 71.23 during the day.

Meanwhile, capital markets regulator and the stock exchanges have stepped up their surveillance systems to keep manipulative forces in check amid an extreme volatility expected today due to the sudden resignation of RBI Governor Urjit Patel and the state assembly results.

So, are we heading for a volatile election year?

If history is anything to go by, it's time to fasten the seat belt.

Every year before the Indian General Election, the stock market has bordered on the extreme. Two of these elections have also coincided with one of the biggest stock market corrections in recent history.

Why this volatility though? Why should elections matter to the stock markets? Investors, both domestic and foreign, expect stability at the central government level. A stable government will be in a position to implement a clear roadmap for the future.

On the other hand, a divided mandate could mean policy paralysis and roadblocks. Markets speculate on these factors.

Also, certain sops are announced before the elections to appease the masses. That too has an indirect effect on listed companies.

Should investors be mindful of these factors? Does this one-year volatility even matter for long-term investors?

As per Research Analyst, Girish Shetty, it ideally shouldn't but the year can certainly throw up a lot of opportunities if there is an irrational reaction to high-quality safe stocks.

Speaking of stock markets, with the state and general elections ahead, market participants expect the stock markets to remain volatile. In our latest episode of Indian Stock Market Podcast, Rahul Shah talks about his mantra to ride out the volatility in times like these. Listen in... visit SoundCloud, iTunes or Stitcher.

In the news from the economy. As per Moody's Investors Service, a central bank's independence is an important consideration in assessing a country's institutional strength and any attempt to curtail would be credit negative. This came on the back of Reserve Bank of India (RBI) governor Urjit Patel resignation on Monday.

Patel, whose three-year term was to end in September 2019, is the first governor since 1990 to step down before his term ended.

Urjit Patel's resignation came four days ahead of the 14 December meeting of the central bank that is scheduled to discuss issues of simmering differences with the government.

Patel cited personal reasons for his resignation, but as per the reports, there were undercurrent since the government cited hereto never-used-before provisions of the law to bring him to negotiating table on issues it felt were of national interest.

Speaking of a tiff between the government and the RBI, here's an excerpt of what Vivek Kaul, the editor of Vivek Kaul Publishing wrote in his article titled RBI-FinMin Bhai Bhai is Always a Bad Idea:

  • "The comment has been made in light of the Reserve Bank of India (RBI) not going all out to defend the value of the rupee against the dollar. The trouble, as I have explained on multiple occasions before is, a central bank getting obsessed with holding the value of its currency against the dollar, is inevitably a bad idea.

    If that means that the RBI does not do what the finance ministry wants it to, then it is basically doing the right thing, the lack of coordination notwithstanding. If central bankers always did what politicians and bureaucrats wanted it to do, the world would have been a much worse place by now."

Owing to this development, banks stocks such as ICICI Bank, SBI, HDFC Bank etc.; will be in focus.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary

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Stock Market Updates

Sensex Ends Marginally Higher; Oil & Gas Stocks Witness Buying (Today's Market)

Jan 18, 2019 Closing

The BSE Sensex ended the day up by 13 points, while the NSE Nifty stood flat.

Sensex Trades Marginally Lower; Telecom & Healthcare Stocks Drag (Today's Market)

Jan 18, 2019 12:30 pm

The BSE Sensex is trading down by 81 points, while the NSE Nifty is trading down by 26 points.

SUN TV Plunges by 5%; BSE 500 Index Down 0.3% (Today's Market)

Jan 18, 2019 11:24 AM

SUN TV share price has plunged by 5% and its current market price is Rs 568. The BSE 500 is down by 0.3%. The top gainers in the BSE 500 Index are SREI INFRA FINANCE (up 3.7%) and HIND. CONSTRUCTION (up 3.6%). The top losers are SUN TV (down 5.2%) and BHARTI AIRTEL (down 5.8%).

VODAFONE IDEA Plunges by 5%; BSE 500 Index Down 0.2% (Today's Market)

Jan 18, 2019 11:16 AM

VODAFONE IDEA share price has plunged by 5% and its current market price is Rs 37. The BSE 500 is down by 0.2%. The top gainers in the BSE 500 Index are SREI INFRA FINANCE (up 4.2%) and HIND. CONSTRUCTION (up 4.1%). The top losers are VODAFONE IDEA (down 5.2%) and BHARTI AIRTEL (down 5.6%).

BHARTI AIRTEL Plunges by 5%; BSE 500 Index Down 0.2% (Today's Market)

Jan 18, 2019 11:10 AM

BHARTI AIRTEL share price has plunged by 5% and its current market price is Rs 332. The BSE 500 is down by 0.2%. The top gainers in the BSE 500 Index are SREI INFRA FINANCE (up 4.2%) and HIND. CONSTRUCTION (up 4.1%). The top losers are BHARTI AIRTEL (down 5.1%) and HSIL LTD (down 5.9%).

HIND. CONSTRUCTION Surges by 7%; BSE REALTY Index Down 0.0% (Today's Market)

Jan 18, 2019 10:54 AM

HIND. CONSTRUCTION share price has surged by 7% and its current market price is Rs 14. The BSE REALTY is down by 0.0%. The top gainers in the BSE REALTY Index is HIND. CONSTRUCTION (up 6.6%). The top losers are HOUSING DEV. INFRA (down 0.4%) and INDIABULLS REAL EST (down 0.5%).

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