Indices dip, gold hits Rs 30,000 as North Korea issue resurfaces

Mumbai: The equity markets slumped sharply in line with most other Asian markets amidst geo-political tension after North Korea conducted its sixth and most powerful nuclear test on Sunday. Mirroring the weakness in global stocks, the Sensex and Nifty drifted lower breaching most of their intra-day support level as risk averse investors dumped equities and moved towards more safer assets such as gold and US treasury bonds.

After plunging 332 points in the intra-day trade, the Sensex staged a marginal recovery towards the fag end of the trading session on short covering to end the session at 31,702.25, down 189.98 points or 0.60 per cent.

The Nifty slipped below its key psychological level of 9900 level mark in the intra-day before ending the day at 9,912.85, losing 61.55 points or 0.62 per cent.

India’s volatility index, which measures investors expectation about the near term volatility jumped 12.22 per cent on the NSE on Monday.

“FPIs formed huge amount of short positions (bearish bets) in index futures. They have also exited 35 per cent of their long positions (bullish derivative contracts) taken during the preliminary stage of the rally seen this year. All these evidences suggest limited steam left in the market and any unfavourable trigger could result into yet another round of profit booking,” said Sneha Seth, derivative analyst at Angel Broking. If the crisis situation with regards to the nuclear weapons in the Korean peninsula continues, the broking firm added that the prices of gold in the international market could inch higher towards $1,360 per ounce while the prices of gold futures in the Indian derivative markets could move higher towards Rs 30,500 per 10 grams in the near-term.

The provisional data released by the stock exchanges showed that FPIs offloaded shares worth Rs 873.91 crore.

Riding on firm global trends and increased buying by local jewellers at the domestic market, gold prices advanced by Rs 355 per ten grams to Rs 30,110, while silver prices soared past the Rs 40,000-mark.