With US President Donald Trump signing a memorandum that would put tariffs on up to $60 billion imports from China, a step immediately reciprocated by Chinese leadership, US markets on Thursday night closed sharply lower with Dow falling more than 700 points in its worst day performance since February 8.
Fear of a full on trade war between US and China, leading to likely slowdown of global economic growth, brought down stock markets all over the world, including in India.
With US President Donald Trump signing a memorandum that would put tariffs on up to $60 billion imports from China, a step immediately reciprocated by Chinese leadership, US markets on Thursday night closed sharply lower with Dow falling more than 700 points in its worst day performance since February 8.
On Friday morning, Asian markets reacted in a similar way. BSE Sensex fell 1.24% or 410 points to 32,596 while NSE Nifty, importantly, dropped 1.15% or 117 points to 9,998, below the crucial psychological level of 10,000. With Friday's fall, Sensex had fallen 1.75% and Nifty by 1.93% during the week.
The development comes at a bad time for Indian markets already besieged by scams popping up every day, coupled with frustrating news about cases before National Company Law Tribunal not going anywhere.
"Locally, markets have been facing headwinds since the start of February, be it the imposition of Long-term capital gains or the much talked about banking fraud. This being a politically busy year in India, volatility can stay high for an extended period," said Devang Mehta, head, equity advisory, Centrum Wealth Management.
With volatility likely to continue for sometime, long term investors would do well to continue buying.
"Volatility is the friend of long term investor. This opportunity should be used by the participants to accumulate quality businesses at reasonable valuations," he said.
Investors might perhaps do well waiting for some more time as the sell off might continue a bit.
"As far as direction is concerned, it's no brainer; we remain in a 'Sell on rise' kind of market. For the coming session, 10060– for Nifty 10110 would be seen as strong hurdle. In case of a bounce back, any attempt towards this resistance zone is likely to get sold into," said Sameet Chavan, chief analyst, technical and derivatives at Angel Broking.
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