 "Markets crumble 6% as Sensex falls to 52-week low, Nifty has biggest one-day fall in 6 years")
Markets finished the Monday session on a dismal note with Sensex and Nifty plunging over 6% mirroring losses in the global equities over fears of slowdown in China, world’s second largest economy. Meanwhile, investors remained unnerved as the rupee fell sharply on stalled growth in China and weakness in the local equities.
Provisionally, the Sensex plunged to a 52-week low, shedding 1,647 points to close at 25,719 levels, while the Nifty slumped 502 points -- its biggest fall in six years -- to end at 7,800 levels,
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(updated at 3:20 PM)The bloodbath on Dalal Street accelerated as markets further continued their southward journey tracking a massive sell-off in Chinese equities amid concerns that a meltdown in China can have implications on the global economy. A steep fall in the rupee mirroring trends in other emerging market currencies has dented the sentiments.
At 3:20 PM, the 30-share Sensex was down 1,666 points at 25,699, or 6.09% and the Nifty slumped 510 points at 7,790, or 6.15%. The Sensex recorded its biggest crash in about seven years intra –day.
In the broader market, BSE Mid-cap and Small-cap indices were down 7-8% each. The health of the market weakened further with 2,422 losers and 260 gainers on the BSE.
Meanwhile, foreign investors remained net sellers in equities with huge sale of Rs 2,341 crore on Friday, as per provisional stock exchange data.
EXPERT VIEW
According to Dipen Shah, Head of Private Client Group Research, Kotak Securities. “The global risk off trade has impacted Indian equity markets also. India, however, derives some positives from the current global meltdown. Brent crude, at $44 per barrel, will ease the current account deficit further, which will also have a positive impact on inflation. This will be a serious positive for several Indian companies. The rupee depreciation will also be positive for exporting sectors and companies, especially the ones which have large exports to US.”
He further said, “Thus, beyond the current sell-off, markets will likely focus on sectors which benefit on a fundamental basis. On the macro front, passage of crucial reforms bills like GST will make India stand out among emerging markets and we need to wait and watch out for the same.”
RUPEE
The Indian rupee continued its free fall amid fears of foreign capital outflows tracking weakness in domestic equities and was trading at 66.64 down 81 paise to the US dollar compared to its previous close on Friday.
Meanwhile, Reserve Bank of India governor Raghuram Rajan in his speech at FIBAC 2015 today assured the street that the central bank will have no hesitation in using foreign exchange reserves in a bid to reduce volatility.
“We have approximately $ 380 billion in reserves to be used as and when the need arises. We will have no hesitation in using our reserves when appropriate to reduce volatility in the rupee,” he said.
CRUDE OIL
Oil prices hit 6-1/2-year lows on Monday after Chinese stock markets suffered their biggest one-day fall since the global financial crisis, intensifying worries over the outlook for global oil demand.
Brent oil was trading down $1.20, or 2.6%, at $44.26 a barrel at 0750 GMT, after hitting an intraday low of $44.00, its weakest since March 2009.
SECTORS & STOCKS
All sectoral indices are trading in red with BSE Realty index slumping nearly 9%
Shares of oil and gas companies witnessed selling pressure with some of them hitting 52-week lows after concerns over sluggish economic growth in China led to sell-off in global commodities. Further, Iran's plans to boost crude oil production in an effort to boost market share also dampened sentiment.
Index heavyweight Reliance Industries was down 8%, while ONGC (9%) and GAIL (8.5%) dropped to hit 52-week lows in intra-day trade today.
Banks were under pressure on concerns that demand for credit would remain subdued on account of sluggish economic growth. The Bank Nifty was down 6%. HDFC, ICICI Bank, HDFC Bank, Axis Bank and SBI were down 3-8% each.
Metal stocks also witnessed immense selling pressure on lower demand from China. Vedanta has slumped nearly 15% while Tata Steel is down 10%
Auto stocks witnessed profit taking on concerns that sales growth in August would remain muted. Tata Motors, Maruti Suzuki, Bajaj Auto, Hero MotoCorp and M&M were down 3-7.5% each.
Among other index heavyweights, Tata Motors extended its losses with another 6.5% drop. ITC, Infosys, Lupin were all down between 2-4% each