Sensex and Nifty spiral down-- fears over Kashmir add to the global blues ahead of RBI policy

The stock markets in India nosedived to a five month low today, after they opened deep in the red over Kashmir and other worries.

BSE Sensex dropped over 418 points today to close at 36,699 points. Nifty too shed 134 points to close at 10,862, today. In fact, the stock exchanges started spiraling within minutes of opening on Monday (August 5).

Even the Indian Rupee opened over a percent lower as risk aversion increased, two days before the Reserve Bank of India is expected to cut interest rates for a fourth time this year. Both local and global cues were at play in taking market sentiment down.

On one hand, simmering tensions in Kashmir added to the speculation of a political upheaval in the valley that has been the centre of a decades-long conflict between India and Pakistan.


On the other hand, China too has escalated its trade war with the US. Yuan fell below 7 dollars for the first time since 2008, which according to experts is a sign that China is not averse to using its currency to take US head on.


The Indian problem

Even before the Kashmir issue came to the fore, the stock markets have been fighting economic uncertainty only, as many business leaders openly spoke of a slowdown. The Kashmir issue just added fuel to the fire as auto sales dropped, and GDP growth forecasts were lowered by CRISIL to 6.9% for the year.

“Going forward, as we approach towards the fag end of the results season, stock specific will pick up and the key commentary from Monetary Policy Committee (MPC) and Reserve Bank of India (RBI) monetary policy amid slowdown in economy will play very crucial role in deciding the near term trend of our markets,” said a report by Karvy Stock Broking.


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