Stocks and gold tumble on US fears

Mumbai, Feb 22 (TruthDive) : Indian stock markets – BSE and Nifty hit a nine-month low on fears that US would stop the stimulus package. This could affect cash flow across all stocks and foreign institutional investments (FII) could be pulled out. This also sent gold prices sliding down.

Stock markets fear that US would stop buying treasury bonds since the economy is showing signs of recovering. The European market too is no different. US Fed had been on a bond buying programme till the economy recovers but now there is talks that this might stop as opinion is divided on the effectiveness of it. If this happens then most of the stocks which has FII investment will get affected.

Almost all the heavyweights like ICICI and Reliance shares tanked. Steel companies’ shares dropped on news of the metal price going down. Auto shares were no different and SKS micro-finance took a hit after IRDA imposed a Rs 50 crore fine.

Banks, metal stocks and consumer goods manufacturers’ stocks dropped from one to three percent. The only stock that gained was Videocon which is in talks with ONGC to sell stake in the oil fields of Mozambique. A marginal drop of 1% was recorded in oil and gas, PSU, health care and power sector. Shriram transport lost heavily after US partner hived off its shares.

Gold which was a profitable investment than shares is losing sheen internationally and in India too. Shares in emerging markets are now much better and in India, the largest consumer of the yellow metal, the fall has been steep. The price in Mumbai dipped to Rs 30,000 per 10 gm. This translated into trade means a Rs 400 drop.

With US adding more jobs, the yellow metal is expected to be no more a great investment. In Singapore market too, it dropped. Stockists are selling gold heavily. The price will fall further as hedge fund managers are hiving gold for equities.

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