Markets: Inflation, and volatility, push Sensex, Nifty, and LIC down on Indian bourses
Mumbai: An all-around washout because of turmoil in the world economy led to a global rout in world equities which engulfed Indian stocks on Monday as investors across the world shunned risky assets.
Meanwhile, bond yields rose and emerging markets’ currencies hit fresh lows against the US dollar, the media reported.
The havoc came after May’s US inflation print, at a 40-year high of 8.6 percent, reignited fears that they will force central banks into aggressive monetary policy tightening. The US Federal Reserve, Bank of England, and Bank of Japan will announce their respective interest rate decisions this week.
Against this global backdrop on Monday, the S&P BSE Sensex plunged 1,776 points intraday before closing at 52,847, down 1,457 points or 2.68 percent.
The Nifty50 fell 427 points, or 2.64 percent, to settle at 15,774. The index touched a low of 15,684 in intra-day trade.
Nestle India was the only Nifty50 company that ended 0.5 percent higher.
The biggest loser in this market volatility in recent weeks has been the Life Insurance Corporation of India (LIC). A whopping USD 17 billion wipe-outs in overall market value have made LIC one of the biggest wealth destroyers among Asia’s initial public offerings (IPOs) this year.
The LIC stock plunged 29 percent since its May 17 debut, which made it India’s biggest-ever IPO. It now ranks only second in terms of market capitalization loss since listing. The drop puts it just behind South Korea’s LG Energy Solution Ltd., which saw an over 30 percent peak-to-trough decline in its share price after an initial spike on debut.
Nearly a month after listing, LIC’s USD 2.7 billion IPO has become one of Asia’s biggest new stock flops this year, as rising interest rates and inflation levels globally hurt demand for share sales, and India’s bourses faced unprecedented selling pressure by foreigners. The benchmark S&P BSE Sensex is down over 9 percent this year.
LIC’s long-awaited IPO was dubbed India’s “Aramco moment” regarding Gulf oil giant Saudi Arabian Oil Co.’s USD 29.4 billion listing in 2019, the world’s largest. It was part of the government’s plans to expand the nation’s capital markets. The share sale, which was oversubscribed by nearly three times, was aimed at narrowing the government’s budget deficit after spending increased during the pandemic since 2020.
(VP)
