China fall drags Indian equities down, again

Sensex sheds 109 points, ends at 24,825, its lowest closing level since June 4, 2014; Nifty slides 37 points to 7,564

Asian shares fell sharply on Monday after China's benchmark indices slid more than 5 per cent amid increasing worries of a slowdown in the country. Indian equities remained volatile, with the BSE Sensex closing at its lowest level in over one-and-a-half years.

Last week, China's benchmark Shanghai Composite slid about 10 per cent, making it the worst performing index globally, and prompting intervention by circuit breakers twice during the week. On Monday it extended its losses by slipping another 5.3 per cent after producer prices in the country fell for a record 46th month.

Indian shares tripped as well, with the BSE Sensex shedding 109 points, or 0.44 per cent, at 24,825 -- its lowest closing level since June 4, 2014. The 50-share Nifty slid 37 points, or 0.49 per cent, at 7,564. The Sensex had slumped more than 300 points intraday but recovered as the uptick in the European market lent support.

"Selling pressure continued on account of weak global markets and poor economic health of the Chinese economy. Global factors will lead to higher volatility in the coming days," said Jayant Manglik, president-retail distribution, Religare Securities.

Last week, the Indian shares had seen their worst weekly pounding in more than four years due to turmoil in the Chinese market. The benchmark Sensex and Nifty dropped 4.7 per cent in the first full week of 2016, their worst weekly performance since November 2011.

The global risk-off sentiment has spurred foreign investors to pull out money from the Indian market. On Monday, foreign institutional investors (FIIs) sold shares worth Rs 1,319 crore, while domestic institutional investors bought shares worth Rs 900 crore, provisional data shows.

Asian indices fell sharply on Monday tracking losses in Chinese shares. Apart from Shanghai Composite, Hang Seng (down 2.7 per cent), Straits Times (2.1 per cent) and Jakarta Composite (1.8 per cent) were major losers. Japan's equity market was closed for a holiday. European markets were trading in the green, up anywhere between 0.37 per cent and 0.54 per cent at 5.30 IST.

Back home, market breadth was weak with 1,225 advances compared with 1,581 declines on Monday. Twenty two out of 30 Sensex components ended in the red. All of the 12 BSE sectoral indices ended in the positive territory, with the BSE Healthcare, BSE IT and BSE Teck losing more than 1 per cent each.

The market is likely to be volatile in the near term with investors awaiting the IIP data for November and the CPI data for December. Market experts said the government will have to push ahead with its reform agenda to spur growth and revive investor confidence back to ensure India withstands the global turbulence triggered by fears over China slowdown.