World Economy

Sensex, Rupee take the blunt from global worries

Business & Politics

News - Biz@India

February 10, 2016

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In Mumbai Stock Exchange, the benchmark BSE Sensex has extended its fall since the beginning of the year, as local and international investors are worried about major world economic challenges, such as the weakness of Chinese growth, of oil prices and some geopolitical unrest, notably in Syria.

The weakness of the Indian rupee against the US dollar, at INR 67 for a dollar, also had a negative effect on the Indian market.

The Sensex, a 30 shares index, has fallen below the symbolic 24,000 points-mark. It was beyond 26.000 points at the beginning of this year. This fall reflects capital outflows by foreign funds and also a cautious sentiment from local and retail investors, in a global context of risk aversion.

Wall Street, Tokyo, Shanghai, London, Frankfurt, Paris or Milan stock markets have experienced similar downward trends, as investors express major and simultaneous sources of concerns about the world economy: the persistent weakness of the Chinese economy, which used to be a reliable engine of growth, some signs of slowing down in the US, the sharp fall of oil prices and most of commodities and the persistent shadow of deflation in a recovering Europe. Not to mention geopolitical factors such as the war in Syria and a general unrest in the Middle East.
In Mumbai, stocks in the sectors of oil, gas and metal, banks, realty and healthcare took a hit since the beginning of the year. The extended NSE Nifty index also receded. Among losers were ICICI Bank, Tata Motors, Adani ports, ONGC or Sun Pharma.

India remains a soft spot in the global economy, with a yearly growth of more than 7%, but it is not immunised against this depressed sentiment among world investors, as it is also impacted by the weakness of giants such as China.

In that context, gold remains as always a safe heaven and its prices rose sharply.

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