Sensex plunges 800 points as Donald Trump nears victory

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Markets which had staged a recovery resumed their downward trend after elections results once again showed that Donald Trump is ahead of his rival Hillary Clinton in the race to the White House. Further, the surprising move by the government on banning high denomination currencies also dampened investor sentiment. At 12:07 pm, the S&P BSE Sensex was down 814 points at 26,777 and the Nifty50 was trading 264 points lower at 8,280. The broader market also witnessed selling pressure with BSE Midcap and Smallcap indices down 5%-6% each. Market breadth was extremely weak with 2,210 losers and 156 gainers on the BSE. "This a rare and black swan event for the country. On markets this will have a long term positive effect. A lot of flow and liquidity will be directed and brought in economy. In short term, we have influence from US elections and this will be deciding the trend. Strong support comes at 8,000 mark while portfolio addition levels. What could get worse if we break this we may slide to 7,740. We can term in percentage to 10% as a decent cut and a value buying opportunity", said Mustafa Nadeem, CEO, Epic Research. Index heavyweights were the top losers with ICICI Bank, ITC, Infosys, HDFC and Reliance Industries were down over 2.5%-5% each. Real estate shares were the top losers post the crackdown on high denomination currencies. The BSE Realty index slumped 14%. Among others,VA Tech Wabag was up 5% to Rs 490 on BSE in an otherwise weak market after the company reported a strong 70% year on year (YoY) jump in consolidated net profit at Rs 24 crore for the quarter ended September 30, 2016 (Q2FY17), on back of healthy operational income. The company had posted a profit of Rs 14 crore in the same quarter year ago.Tota Markets staged a recovery after latest election results indicate that Hillary Clinton has narrowed the gap with Donald Trump in the race for the presidency. Besides, Prime Minister Narendra Modi on Tuesday announced that 500 and 1,000 rupee banknotes would be withdrawn from circulation at midnight to crack down on rampant corruption and counterfeit currency. "In the long run banking will benefit with this decision as the rotation of black money will reduce and more people will start taking banking services. Housing finance and construction company will also benefit as housing will become more affordable," said Rohit Gadia, Founder & CEO, CapitalVia Global Research. ALSO READ: US Election 2016: Dow futures plunge as Trump leads Presidency battle By 10:30 am, the S&P BSE Sensex was down 1,010 points at 26,581 and the Nifty50 was trading 335 points lower at 8,209. In the broader market, the BSE Midcap and Smallcap indices are down 5% each. AK Prabhakar, Head of Research at IDBI Capital adds, "Nifty has recovered from around 8000 levels and maybe one more dip till 7,900 looks possible post which recovery till 8600 or 8700 can be seen". The SGX India Nifty futures contract fell 1.7% in early trade in Singapore on Wednesday, indicating losses for Indian stock markets after a surprise move by Prime Minister Narendra Modi to abolish larger denomination banknotes. Adds Gadia, "I believe Nifty will take support on 8,000 level which is its long term support level and the 200 DMA also coincides with this level. Now 8,500 level become the resistance level as it has taken support on this level multiple times before. Even if Donald Trump wins, market will find difficult to break the important support level of 8,000 level on closing basis." GLOBAL MARKET The US dollar sank and stock markets slammed into reverse in wild Asian trade on Wednesday as every new exit poll in the U.S. presidential election showed the race to be a nail-biter, sending investors stampeding to safe-haven assets. Much of the action was in currencies where the Mexican peso has become a touchstone for sentiment on the election as Republican Donald Trump's trade policies are seen as damaging to its export-heavy economy. Asian stocks first rose only to retreat more than 1 percent as the session wore on and more election results flooded in, while US stock futures surrendered modest gains and recoiled more than 3%. BLACK MONEY CRACKDOWN Prime Minister Narendra Modi on Tuesday announced that 500 and 1,000 rupee banknotes would be withdrawn from circulation at midnight to crack down on rampant corruption and counterfeit currency. The surprise move was designed to bring billions of dollars worth of cash in unaccounted wealth into the mainstream economy, as well as hit the finances of militants who target India and are suspected of using fake 500 rupee notes to fund operations. Dhiraj Relli, MD & CEO, HDFC Securities says,” This is a logical next step in cleaning of the system and weeding out the black money. This will clean up the real estate sector and bring down the cost of doing business. This will put an end to any desire to generate black money. As there will be no motivation to generate black money, the economy will see more inflows and the GDP will go up. The move should also strengthen the rupee on a standalone basis, without taking into consideration the outcome of the US vote. The FIIs will like this and pump on more money. The rating agencies will soon have to go back to their desks to rerate India.” Nithin Kamath, Founder & CEO, Zerodha adds, "Couple of decades later, if one were to look back at the greatest economic moments of India, this would be one of them. The demonetization of 500 and 1000 Rupee notes will realign many things, right from the way we transact daily to real estate prices. This move once again proves that the government's intent and actions are in sync. Naturally, this will be great for the overall economy and the markets in general." Top losers from the Sensex pack are ICICI Bank, Adani Ports, Axis Bank, Tata Motors and Reliance Inds, all dipping between 6%-10%. Adani Enterprises on Tuesday informed BSE that it has formed a joint venture with an Israeli firm Elbit Systems for manufacturing unmanned aerial vehicles, popularly known as drones. Coal India has dramatically increased the target for selling coal through auction to 120 million tonnes (mt) this financial year, which it hopes will help in import substitution and meet electricity needs. Rating agency CRISIL has downgraded ratings for the Jammu and Kashmir Bank’s fixed deposits from 'AA' from 'AA-' on increase in the stress on its advances in troubled state and its consequent impact on profitability. Budget carrier IndiGo's parent today posted a nearly 24% rise in its net profit at Rs 139.85 crore in the three months ended September 2016, mainly aided by higher passenger revenues.

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