Capital market stocks plunged on August 26, tracking the overall downturn in the stock market today. The sharp fall in the share prices pushed the Nifty Capital Markets index down over 2 percent to hover around 4,302 in the afternoon.
The capital markets index has now extended losses for the second consecutive session.
Benchmark indices Sensex and Nifty dropped on Tuesday, buoyed by multiple factors. Nifty 50 fell 0.7 percent (around 178 points) to drop below the key 24,800-mark. Sensex meanwhile fell 0.74 percent (more than 600 points) to stand at around 81,035.
India VIX, which measures volatility in the market, jumped nearly 4 percent today to hover around 12.20. This comes after Donald Trump-led US administration issued a draft order over the implementation of additional 25 percent tariff on Indian imports, effectively from August 27 (Wednesday).
Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said, "The biggest headwind for Indian markets remains whether Nifty can scale the 'Wall of Worry' around the 50 percent Trump tariff set to kick in on August 27, which threatens to make almost all of India's USD 86.5 billion exports to the US commercially unviable."
Weak global cues, FII selling and declining rupee further pressured the markets.
Capital market stocks followed the downturn in the overall sector. Angel One shares dropped more than 4 percent to trade at Rs 2,346 apiece, while Kfin Technologies and Multi Commodity Exchange of India (MCX) shares plunged nearly 4 percent each.
Bombay Stock Exchange (BSE) shares dropped nearly 3 percent, while CDSL, HDFC AMC and CAMS shares were down around 2 percent each.
UTI AMC, Indian Energy Exchange (IEX), Motilal Oswal Financial Services, Anand Rathi Wealth and Nuvama shares were down around 1 percent each. Bucking the trend, 360 One WAM shares were trading in the green with marginal gains.
Also read: Our LIVE blog on stock market updates
Earlier last week, the shares had dropped after SEBI Chairman Tuhin Kanta Pandey said that the market regulator in looking at increasing the tenure of equity derivatives after discussion with stakeholders, and a consultation paper in this regard will be initiated.
SEBI chairman also said there is a need to ensure quality and balance in the F&O segment. "Equity derivatives play an important role in capital formation, but we must ensure quality and balance. We will consult with stakeholders on ways to improve in a calibrated manner the tenor and maturity profile of derivative products, so they better serve hedging and long-term investing," he said while speaking at FICCI's 22nd annual Capital Markets Conference in Mumbai on August 21.
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