US President Donald Trump plans to levy tariffs on steel and aluminium to boost domestic industry and jobs. He has also threatened to impose a tax on cars. A formal agreement in this regard is expected to be signed this week. Investors fear the move would ignite a global trade war, with China warning that it won’t sit idle if its economy is hurt. Most Asian markets
also fell close to 1 per cent in Monday’s trade.
“The domestic market was hit on fears of a likely hike in the US import tariff on steel and aluminium. The metal sector has taken the biggest hit so far. Indian exporters would look at the dawning possibility of a global trade war, adding to the anxiety of the investors awaiting outcomes of major central banks meetings this week,” said Anand James, chief market strategist, Geojit Financial Services.
Both domestic and overseas investors were net sellers on Monday. Foreign institutional investors sold shares worth Rs 3.7 billion, while their domestic counterparts pulled out Rs 1.5 billion. The overall market breadth was negative as 2,041 stocks ended in the red, while only 701 gained.
According to experts, the equity markets
are likely to remain volatile, while gold could see safe-haven buying as a hedge against global uncertainties.
Most sectoral indices, barring technology, ended with losses. The BSE Metal index dropped 3.3 per cent to a two-month low. Shares of Hindalco and JSW Steel fell over 4 per cent each. Among the Sensex pack, Tata Motors and Tata Steel fell the most at 5 per cent and 3 per cent, respectively. Among the top gainers were Sun Pharma and TCS, which rose over 2 per cent each. On a year-to-date basis, the Sensex and the Nifty are down by over 1 per cent each.
BJP win fails to lift mood
The BJP-led coalition’s win in Tripura and Nagaland has failed to lift investors’ sentiment. This is the first time the BJP was able to make significant headway in the northeastern states. “It builds a strong momentum for the BJP in the upcoming state elections in 2018 and the national polls in 2019,” said Ajay Bodke, chief portfolio manager — PMS, Prabhudas Lilladher.
“These election results will be a sentiment booster for the BJP... Upcoming state elections will be important as they will largely be two-way fights between the BJP and the Congress,” said Sonal Varma, chief economist, Nomura India.