Trump Investigation Spooks Indian Markets, Sensex Tumbles

The long running bull market received a major jolt as calls for an investigation on President Trump’s connection with Russia gained ground spooking global markets, and India was no exception. The BSE Sensex pulled back on the news slipping 223.98 points during the day, and closing at 30434.79.

The markets tried to hold up in the morning session, but selling intensified post lunch session as positional traders unwound their positions and short-sellers started to tighten the pressure on the markets. Bulls were also seen puling out from the markets as the broader market yardsticks pointed that stocks were turning overbought and stretching in valuations.
Markets see this as a major test for the Trump Presidency particularly after press reports suggesting that Trump leaked sensitive intelligence to Russian officials. The US Justice Department has also named former FBI chief Robert Mueller to investigate alleged Russian interference in the 2016 US election and a likely collusion between Trump’s election campaign and Russia.

The international news drove foreign investors to press sales in the Indian market. Foreign investors have pressed sales having pulled out approximately Rs 731.39 crore on May 17. If the scandal gripping the White House continues, the global markets could further face selling pressure from foreign investors, say analysts.

Most Sensex stocks were in the red as traders were seen taking out profits from the markets. BHEL lost 3.69 per cent, Tata Motors slipped 2.5 per cent and Axis Bank dropped 2.15 per cent and were among the biggest losers in the Sensex.

With foreign investors pressing sales, the rupee took a beating slipping to Rs 64.84. This had a positive impact on IT and export driven stocks though. TCS & Wipro surged 3.38 and 3.47 percent respectively.
Experts point out that the liquidity gush into the markets will continue from the domestic markets.

Stock markets had gained significantly post a strong breakout from 9000 levels. Experts point out that the markets are not likely to break below the 9000 levels, but given that the prices have risen considerably, a consolidation was due – and will probably continue for some time.

However, Indian markets are not expected to correct in a major way as any correction is expected to be bought into by the domestic investors. Analysts point out that a correction is being seen as healthy for the markets, and that buying on dips will increase at lower levels.