Stock Market Crashes Due to India-Canada Tension: What You Need to Know

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The stock market is experiencing a significant downturn today amidst the ongoing diplomatic tensions between India and Canada. The Sensex began the day with a sharp decline of 500 points, and the Nifty also slipped below the 20,000 mark. This decline in market performance can be attributed to the diplomatic standoff between India and Canada, which stems from the recent killing of a Khalistani terrorist.

It’s worth noting that many Canadian pension funds have poured billions of dollars into Indian companies, with notable players including the Canada Pension Plan Investment Board (CPPIB), Quebec Workers’ Pension Fund, and the Ontario School Teachers Pension Fund, all of which have recently established their offices in India. Collectively, these three funds manage a staggering portfolio worth over $893 billion.

Total Investment of Canada in India

The investment landscape between India and Canada is on an upward trajectory, with a projected increase to 36.3 billion Canadian dollars in 2022. This represents a 37 percent growth compared to figures from four years ago. Notably, CPPIB, Canada’s largest pension fund, had invested a substantial $21 billion in India just a year ago. Canadian investments in India are particularly focused on sectors such as renewable energy, infrastructure, and banking.

Before the Federal Reserve meeting in the United States, bond yields reached a 16-year high, and the ripple effect of this development was felt in the domestic stock market. Stocks of major Indian companies like HDFC Bank, Reliance Industries, and Infosys saw declines in their value. As of 10 am, the Sensex was trading at 67,171.98 points, marking a decrease of 424.86 points or 0.63 percent. Among the Sensex constituents, HDFC Bank, Tech Mahindra, Tata Steel, Bharti Airtel, and Infosys witnessed declines, whereas ICICI Bank, Power Grid, Larsen & Toubro (L&T), IndusInd Bank, and Axis Bank exhibited growth. HDFC Bank shares saw a significant drop of more than three percent, while Reliance shares dipped by approximately two percent.

The Canada Pension Plan Investment Board (CPPIB), with investments in 70 public companies in India, holds a 2.7 percent stake in Kotak Mahindra Bank, which is currently trading at Rs 1786.70 with a 0.60 percent decrease. Another pension fund of Canada Quebec’s also had invested eight billion Canadian dollars in Indian assets by the end of the previous year, and the Ontario Teachers’ Pension Plan allocated three billion Canadian dollars for investments in India.

The total Canadian investment in the Indian market as of the end of August stands at Rs 1.77 lakh crore, with equity markets accounting for investments worth Rs 1.5 lakh crore.

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