Stocks On A Rollercoaster, Time To Fasten Seatbelts

No it's not the withdrawal of currency notes that is impacting the markets, but the chances of a Trump victory that is sending stocks tumbling as early election results in the US are coming in favour of Trump.

Indian markets opened to one of their worst starts in a long time losing over 4 percent in early trades. The BSE Sensex tipped over 1,000 points as fear of a Trump victory is sending stocks tumbling across global markets.

Stocks had braced higher last week as reports of Clinton emerging victorious drove markets on the recovery path, but that has proved to be short-lived.

In early trades, panic gripped the exchanges as the BSE Sensex nosedived 1,340 points. A steady buying at lower levels has helped the markets to recover around 300 points as the BSE Sensex trades down 1,041 points.

BSE Consumer Durables and BSE Realty Index took the biggest hit tumbling 9.24 percent and 10.51 percent at opening. Apart from a Trump victory, the withdrawal of Rs 500 and Rs 1000 notes is expected to impact consumer staples and the realty sector in the coming months as these sectors usually use a lot of cash.

Jewellery stocks are also getting impacted. Titan crashed 12.3 percent to Rs 324. The gold and jewellery segment is another sector that uses cash for bulk purchases, and buying could get impacted.

The government's move to withdraw Rs 500 and Rs 1,000 notes is being seen as a short-term negative in the market, while in the long run the impact on the economy will be better as more businesses come under the formal economy.

Stock market participants, meanwhile, are bracing for a volatile period in the short run as the full impact of a new government in the US and the ban on currency will only be known in the next few days.

Investors who have entered the markets late are likely to be sitting on huge loses, while those who hedged their positions expecting a change in US leadership would have done well for themselves.

In the coming few days, stock markets are expected to trade volatile. If all goes well in the US, the stock markets could also stage an equally spectacular recovery.