Sensex plunges 1,058 pts on Brexit; Market-cap down Rs 4-trn

Friday, Jun 24, 2016,13:07 IST By metrovaartha A A A

Mumbai | Market benchmark Sensex took a big 1,058-point plunge this morning as UK’s vote to exit European Union sent financial markets into a tailspin, eroding nearly Rs 4 lakh crore from the investors’ wealth held in stocks. Rupee was also down almost 96 paise, though the government and RBI sought to play a brave face saying the fall in Indian currency was relatively moderate in comparison to many other currencies globally.

RBI Governor Raghuram Rajan also promised full liquidity support to ensure orderly adjustments in the market, even though he maintained that Brexit referendum has caused a major adjustment in asset classes globally with gold and the US dollar going up and the stocks taking a plunge everywhere. Soon after the markets opened this morning, heavy selling was seen across all sectors including realty, industrials, metals, auto, banking, finance, capital goods and power, as reports began to come in about Britain voting for exit from EU.

In the pre-open trade itself, the Sensex fell by over 634 points, while it opened sharply lower at 26,367.48, 940 points below its previous close, and plunged even further soon to touch a low of 25944.53 points with a massive decline of nearly 1058 points or about 4 per cent. It recovered a small portion later to return above 26,000 level in late morning trade. The NSE 50-share Nifty was also trading down by 310.30 points or 3.75 per cent to quote at 7,960.15.

Major losers were Tata Motors that dipped by 11.40 per cent, Tata Steel by about 9 per cent. ICICI Bank, Axis Bank, SBI, Adani Ports, Larsen, ONGC and Reliance Industries were also down significantly. Foreign investors are said to have sold heavily, while some buying by domestic institutions at lower levels was seen to be of little help. In overseas markets, all Asian markets tumbled as investors reacted nervously to results of the UK referendum. Pre-open trends for the European and US markets also showed weak trends. The total investor wealth, measured in terms of cumulative value of all listed stocks in India including that of promoters, plunged by nearly Rs 4 lakh crore to slip below Rs 98 lakh crore level. Concerns further 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. Besides, there are fears that the UK operations of several Indian companies might take a hit due to immigration and other restrictions that might come in because of Brexit.