Markets tank as US, China reignite trade tussle, RBI policy eyed

New Delhi: Benchmark Sensex slumped more than 350 points on Wednesday in line with a wider global market meltdown after US and China escalated their trade tensions with a fresh round of retaliatory tariffs.

Domestic investors were also reluctant to expand their portfolios ahead of the RBI's monetary policy review, brokers said.

Sentiment dampened after China today decided to impose new tariffs on 106 American products, including aircraft and cars, as the world's two largest economies edged closer towards an all-out trade war.

The move followed US President Donald Trump slapping fresh tariffs on certain Chinese imports. The 30-share Sensex opened positive and advanced to a high of 33,505.53 but succumbed to a sudden sell-off in the afternoon, hitting a low of 32,972.56.

It finally ended 351.56 points or 1.05 per cent down at 33,019.07. This is the benchmark's biggest fall since March 23, when it had lost 409.73 points.

The broader NSE Nifty, after scaling the day's high of 10,279.85, slipped into the negative terrain to 10,111.30 before closing at 10,128.40, down by 116.60 points, or 1.14 per cent.

"Market slid 2 per cent from the day's high due to looming trade war tensions and caution ahead of RBI policy meet. Global market volatility continued to give a ripple effect to the market despite gradual recovery in domestic economy and moderation in inflation.

"RBI's policy is likely to support near term sentiment while clarity on earnings growth and monsoon will give more transparency in direction," said Vinod Nair, Head of Research, Geojit Financial Services.

The Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel, started its two-day meeting today amid little hope of a cut in the key policy rate because of hardening global crude oil prices.

Meanwhile, foreign portfolio investors (FPIs) sold shares worth Rs 376.51 crore, while domestic institutional investors (DIIs) bought shares to the tune of Rs 479.18 crore yesterday, as per provisional data.

Tata Steel emerged as the worst performer in the Sensex pack today, falling 3.29 per cent, followed by Axis Bank at 2.61 per cent. Other laggards were L&T, NTPC, IndusInd Bank, Kotak Bank, Yes Bank, NTPC, Bharti Airtel, Dr Reddy's, HDFC Bank, M&M, Sun Pharma, HDFC Ltd, Coal India, SBI, Infosys, Asian Paints, ONGC, Power Grid, Bajaj Auto, Wipro, ICICI Bank, RIL and Maruti Suzuki, declining up to 2.52 per cent.

Tata Motors topped the gainers list, surging 3.60 per cent, after JLR India reported an 83 per cent rise in FY18 sales and lined up 10 new products for the new fiscal. Hero MotoCorp too gained 0.81 per cent.

Among BSE sectoral indices, metal fell 2.75 per cent, followed by consumer durables (2.55 per cent), capital goods (1.96 per cent), bankex (1.63 per cent),PSU (1.63 per cent) infrastructure (1.52 per cent), power (1.30 per cent), realty (1.23 per cent),oil & gas (1.15 per cent), teck (1.06 per cent), healthcare (1.05 per cent), and IT (0.96 per cent).

Broader markets witnessed a similar trend, with the small-cap index shedding 1.01 per cent and mid-cap 0.92 per cent.

Globally, European markets were trading in the negative zone in their early deals. Frankfurt's DAX fell 1.12 per and France's Paris CAC was down 0.40 per cent.

London's FTSE declined 0.42 per cent. Asia closed mostly down. Hong Kong's Hang Seng fell 2.19 per cent, Shanghai Composite Index lost 0.18 per cent and Singapore tumbled 2.12 per cent, while Japan's Nikkei rose 0.13 per cent.