Reliance and Paytm triggered India’s stock market bloodbath

Stocks under stress.
Stocks under stress.
Image: Reuters/Shailesh Andrade
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India’s stocks are sliding down after two major business disappointments.

On Nov. 18, India’s biggest IPO tanked. The overhyped $2.5 billion Paytm stock market debut closed 27% lower on listing day. It plunged another 13% today (Nov. 22). Paytm’s “subdued listing” and subsequent “weak trading” are a “big sentimental setback,” says Vinod Nair, head of research at Geojit Financial Services. “It will impact the inflow of money from the retail segment, which has been a key player during the year.”

A day after the Paytm listing, Reliance Industries’ 2019 deal with Saudi Arabia’s state-controlled energy giant Aramco was called off. As India’s largest company eyes a greener future, Aramco’s plan to buy a 20% stake worth $15 billion is off the table. Shares of the Mukesh Ambani-led company fell more than 4% on the news.

The two events together created a cocktail of chaos for domestic public markets. “Re-evaluation of the index heavyweight RIL’s deal with Saudi Aramco and continued selling pressure on shares of India’s largest IPO Paytm are bearing heavy on indices,” Nirav Karkera, head of research at investment advisory Fisdom, told daily newspaper Mint.

The benchmark S&P BSE Sensex, which includes Reliance among its 30 stocks, plunged more than 1,000 points, or 1.96%, to 58,465.89.

S&P BSE Sensex 30
S&P BSE Sensex 30 on Nov. 22, 2021.
Image: BSE India/S&P BSE Sensex 30

The broader NSE Nifty index, which comprises 50 of India’s largest companies, also fell 1.96%, ending 348 points lower at 17,416.55.

Of course, Reliance and Paytm alone haven’t derailed the country’s public markets. There are slew of other local and international factors eroding investor sentiment, including:

Meanwhile, the brightest spot in an otherwise troubled market is the telecom sector. Bharti Airtel and its rival Vodafone Idea both rallied 6% after Airtel raised tariffs.