Stock Markets React to Growing Tensions in Canada

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Indian stocks held by the Canada Pension Plan Investment Board took a hit because of the standoff between the two countries, while the hawkish stance by the US Federal Reserve led to the Sensex falling 570.60 points on Thursday.
According to NSDL, Canadian entities hold Rs 1.77 trillion of debt and equity in Indian companies, with as much as Rs 1.51 trillion in equities — and is ranked seventh among all the countries.
The Canada Pension Plan Investment Board (CPPIB) is the largest pension manager in Canada. It holds 2.68 per cent in Kotak Mahindra Bank, 6 per cent in Delhivery, 2.37 per cent in Zomato, 2.18 per cent in Indus Towers and 1.76 per cent in One97 Communications, the parent of Paytm, among others.
All of these stocks witnessed selling pressure on investor apprehensions over the widening rift between the two countries.
However, market analysts felt the tensions are unlikely to result in any major pullout from the Canadian pension manager.

According to Parth Nyati, Founder at Tradingo, while the markets are viewing the issue primarily as a political one, immediate implications on trade relations between the two countries are not perceived to be substantial.
“Pension funds, known for their long-term investment perspective, typically do not react hastily to such geopolitical events. They maintain a strategic outlook and are likely to wait for developments before making any major ad-justments.”
“There’s a reasonable expectation that this issue will be resolved over time. Howev-er, should the tension escalate further, a thorough analysis of the situation will be warrant-ed.
“At this moment, it’s crucial for investors to remain steady and avoid succumbing to panic,” Nyati said.
Most of the shares where the CPPIB has an investment ended in the red. (See table) The selling pressure on these counters came on a day the broader indices succumbed to a weak trend in global markets following a hawkish guidance from the US central bank.
Though the Fed kept interest rates unchanged, it hinted that there could be one more hike before the end of this calendar year and fewer cuts than expected next year.
Its guidance drove the 10-year US treasury yields to fresh 16-year highs as it opened at nearly 4.41 per cent against the previous close of 4.35 per cent.
Similarly, the US dollar index was also ruling firm. Amid such headwinds, domestic investors resorted to selling in auto, banking and financial shares.
As a result, the Sensex cracked 570.60 points or 0.85 per cent to end at 66230.24.
During intra-day trades, it tanked 672.13 points or 1 per cent to 66128.71.

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