India ETFs Plummet on Military Skirmish Across Pakistan
India’s markets and country-specific exchange traded funds took a nosedive Thursday on a political risk-induced sell-off after the Indian army executed strikes on terrorist camps in Pakistan.
Leading the sell-off on Thursday, the Market Vectors India Small-Cap Index ETF (NYSEArca: SCIF) plunged 7.5% and iShares MSCI India Small-Cap ETF (BATS: SMIN) plummeted 5.6%.
Additionally, the WisdomTree India Earnings Fund (NYSEArca: EPI) fell 3.8%, PowerShares India Portfolio (NYSEArca: PIN) dropped 3.6% and iShares India 50 ETF (NasdaqGM: INDY) retreated 3.8%.
All of the India country-specific ETFs dipped below their short-term, 50-day simple moving averages in their worst sell-off since the Brexit outcome in June.
Moreover, the expiry of September series derivatives contracts added to the volatility, reports Ami Shah for Live Mint.
While dealers argued that long-term India remains a strong bet, the short-term uncertainty between India and Pakistan could fuel market volatility.
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The Indian army conducted strikes along the Line of Control in Azad Jammu and Kashmir on terrorist launch pads overnight on Wednesday.
“Panic set in the market after the news of India’s surgical attack on terror camps. This, coupled with derivatives expiry, ensured volatility and weakness in the market,” Rikesh Parikh, vice-president of equities at Motilal Oswal Financial Services Ltd, told Live Mint. “Investors will closely watch how developments pan out. Until then, it is difficult to predict the near-term movement in the market.”
The military strike was carried out across the de facto frontier that runs through a disputed Himalayan territory. Consequently, the excursion raised the possibility of military escalation between India and Pakistan that could end the 2003 Kashmir ceasefire, Reuters reports.
Prime Minister Narendra Modi previously warned that those India held responsible “would not go unpunished” for a September 18 attack on an army base in Uri that killed 18 soldiers.
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Market Vectors India Small-Cap Index ETF
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