Mumbai, June 24
Pounded by Brexit, stocks and rupee went into a tailspin today with the Sensex taking 1,090-point early morning plunge and rupee crashing by 96 paise, but late buying by domestic institutions and talking-up by policymakers helped them recoup some losses.
The BSE Sensex still ended the day 605 points lower, its biggest single-day fall in over four months, while the rupee closed 71 paise down at 67.96 against the US dollar, its lowest level in four months.
Consequently, total investor wealth, measured in terms of cumulative market value of all listed stocks, tanked nearly Rs 1.79 lakh crore.
Domestic stocks, which had plunged 1,100 points in early trade, recouped some of the losses on value-buying and reassuring words by policymakers, including Finance Minister Arun Jaitley and RBI Governor Raghuram Rajan.
In what was termed as ‘readjustment across all asset classes’ by Rajan, gold prices went up with the yellow metal again emerging as a ‘safe haven’ investment.
“Brexit has come as a shocker to markets who were expecting Britain to remain in the EU. There was mayhem in global markets as the news trickled in, though some semblance of normalcy came in the final hour of trading,” said Hariprasad MP, senior vice-president and head treasury and banknotes business, Centrum Direct.
In a deadly blow to the 28-nation bloc, Britain today voted to leave the EU, forcing Prime Minister David Cameron to announce resignation in the wake of defeat in the referendum whose result triggered a panic reaction in world markets.
Japan’s Nikkei tumbled 7.92% while Hong Kong’s Hang Seng fell 2.92%. Europe was also in deep red with London-based FTSE index down 9% at one point.
The pound collapsed to a 31-year low against the dollar after crashing 10% while compared to the rupee, British currency fell around Rs 7 to 93.13.
After opening lower at 26,367.48, the BSE Sensex continued to slide, hit by plunging global markets, forcing the index to crack the 26,000-mark and touch a low of 25,911.33.
However, value-buying in key blue chips, helped the index recover part of the lost ground to close the session 604.51 points or 2.24% down at 26,397.71. This was the index’s weakest closing since February 11.
The NSE Nifty, which cracked below the 8,000-level, managed to recover part of the initial losses and settled 181.85 points or 2.20% down at 8,088.60.
Tata Group stocks were among the biggest fallers, plunging up to 8%, as Brexit spooked investors given the conglomerate’s huge exposure to the region.
Tata Group’s blue chips, Tata Motors slumped 7.99%, Tata Steel plunged 6.37% and TCS slipped 2.78% on the BSE. Tata Motors and Tata Steel were the worst performers among the 30-Sensex stocks.
Concerns mounted as commentators said Britain’s exit, commonly referred to as Brexit, would mean that the EU could slip into recession while Indian companies would also need to rework their strategy to use UK as a gateway for their European operations. — PTI
"If there are disruptions in the markets and liquidity is not available from certain quarters, we are fully ready to provide whatever liquidity is needed... Both dollar liquidity as well as rupee liquidity Rs "— Raghuram Rajan, RBI Governor
"The government, RBI and other regulators are well prepared and working closely together to deal with any short-term volatility. Our aim will be to smooth this volatility and minimise its impact on the economy in the short term" — Arun Jaitley, Finance Minister