Bears on prowl: Indices retreat most in 7 months, RIL falls over 4%

 Reliance's decline, rollback of farm laws weigh on investor sentiment

The Indian markets posted their sharpest decline in nearly seven months on Monday as a tsunami of factors impacted investor sentiment.

Paytm’s listing fiasco, the sharp drop in shares of index heavyweight Reliance Industries (RIL), and the rollback of farm laws were among the domestic factors that weighed on sentiment. The resurgence of Covid-19 in Europe and fears around US tapering, too, played on investors' minds.

In intraday trade, the Sensex dropped as much as 1,624 points or 2.7 per cent. The 30-share index recouped some losses to end at 58,466, down 1,170 points, or 1.96 percent, wiping Rs 8.2 trillion of investors' wealth. The Nifty, on the other hand, ended the session at 17,432, a decline of 332 points or 1.8 per cent. This was the steepest single-day decline for the indices since April 12 this year. In the past four sessions, Sensex has lost 2,253 points or 3.7 per cent — underperforming most global peers.

The stock of India’s most valuable company RIL fell 4.4 per cent and dragged Sensex down by 318 points. This after RIL announced that it is re-evaluating Saudi oil major Aramco’s proposed investment in the company. Reliance and Aramco, in August 2019, had signed a non-binding agreement for a 20 percent stake sale to the Saudi firm in the former’s oil-to-chemical business.

The sharp decline in shares of digital payment’s major Paytm also dented investor confidence. Since its debut, Paytm’s market capitalization has plummeted by Rs 51,194 crore.

"The decline in Paytm shares was sharp, and it dampened the sentiment of retail investors, who have taken a big hit. Some of them may sit on the sidelines for a while. The news about RIL came on the back of a weak market, adding to the volatility. But it has been a well-performing market; a 5-10 percent correction is expected. If it consolidates at that level, we don't have much to worry about. Liquidity is still there," said Andrew Holland, CEO, Avendus Capital Alternate Strategies.