Mumbai, Jun 24: Pounded by Brexit, stocks and rupee went into a tailspin on Friday 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 INR 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 M P, Senior Vice-President & Head Treasury & Banknotes Business, Centrum Direct.
In a deadly blow to the 28-nation bloc, Britain on Friday 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 per cent while Hong Kong’s Hang Seng fell 2.92 per cent. Europe was also in deep red with London-based FTSE index down 9 per cent at one point.
The pound collapsed to a 31-year low against the dollar after crashing 10 per cent 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 bluechips, helped the index recover part of the lost ground to close the session 604.51 points or 2.24 per cent 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 per cent down at 8,088.60.
Tata Group stocks were among the biggest fallers, plunging up to 8 per cent, as Brexit spooked investors given the conglomerate’s huge exposure to the region.
Tata Group’s bluechips, Tata Motors slumped 7.99 per cent, Tata Steel plunged 6.37 per cent and TCS slipped 2.78 per cent on 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.
