Carnage on D-Street: Sensex sinks 807 points as global indices bleed

Markets attained fresh 52-week closing low with Sensex and Nifty breaching 23,000 and 7,000 levels respectively mirroring slump in the global equities after Fed chair Janet Yellen in a testimony to Congress stated that global economic turmoil and massive sell-off in global equity markets could spook the US economy.

S&P BSE Sensex slumped 807 points to close at 22,952 and the Nifty50 cracked 239 points to end at 6,976, their lowest levels since May 9, 2014. Sensex and Nifty hit an intra-day low of 22,909 and 6,960 mark, respectively today. Moreover, Nifty witnessed a huge fall of 31% from its peak level of 9,119. 

 

"Weakness in global stocks hit domestic sentiment adversely, dragging down both the Sensex and the Nifty by more than 3%. As concerns over a global economic slowdown seem to be mounting, European stocks too traded sharply lower, dragged down by a sell off in banking and mining stocks. The US Federal Reserve Chief Janet Yellen’s congressional testimony yesterday served to stoke investor fears further as she warned against the impact of a global financial market turbulence on US growth," said hreyash Devalkar, Fund Manager – Equities, BNP Paribas Mutual Fund in a note.

Meanwhile, volatility in the crude oil prices and weakness in rupee further accentuated the fall at the D-Street. The rupee breached the 68-mark today quoting at 68.24 down 40 paise against the greenback as demand for dollar from banks and importers garnered pace amid bearish local equities.

India's volatility index VIX India that measures the local market's expectation of volatility in the near term, is up 16% quoting at 26.05, its five month high. The market breath was dismal with 2,360 declines versus 323 advances.

"It was yet another day of strong selling in the equities, with selling across the board. There were a lot of significant levels, such as 7,200/7,050/7,000 which were considered to be strong support breached today. The selling pressure exacerbated in the second half after the dismal results from many heavyweight large cap stocks. The selling pressure was not just on internal data, the European markets opening also added to the pressure," said Kunal Shah, Head-Advisory, LKP Securities

"We believe that its prudent enough to wait on the sidelines before investing any fresh money at this point, as the volatility is very high. However, with results season over we believe that the focus now would be completely on how the global markets shape up, as it could guide the trend in the near term. The next major support for Nifty would now be at 6,850/6,600 levels," he added.

Further, traders remain cautious ahead of the Index of Industrial Production (IIP) and Consumer Price Inflation (CPI) data due tomorrow.

GLOBAL MARKETS

Asian markets closed deep in red after Federal Reserve Chair Janet Yellen in a testimony to Congress stated that global economic turmoil and massive sell-off in global equity markets could spook the US economy. Meanwhile, volatility in the crude oil prices dented the sentiments. Hong Kong's Hang Seng, South Korea, the Kospi and Singapore’s Straits Times closed between 1%-3%. 

Meanwhile, Japan markets were closed for the National Foundation Day holiday while Mainland Chinese markets and Taiwan will resume trade next week. 

In line, European shares were declining weighed down by a renewed plunge in banks and miners. France’s CAC 40, Germany’s DAX 100 and England’s FTSE dropped between 2%-4%.

MID-, SMALL-CAP PACK

Shares of midcap and smallcap companies bled with the S&P BSE Midcap and S&P BSE Smallcap indices hitting their respective 52-week lows today. BSE Midcap and Smallcap indices slumped between 3%-4%.

Oriental Bank of Commerce, Alstom T&D India, Tata Global Beverages, 3M India and Bank of India, Jet Airways, Orbit Exports, Nahar Spinning Mills, SRS, Grauer & Weil (India), Titagarh Wagons and Saurashtra Cements were down up to 10% each.

KEY STOCKS & RESULT IMPACT

State Bank of India (SBI) declined 3.5% after posting a 61.6% drop in its net profit for the third quarter. The bank posted a profit of Rs 1,115.34 crore for the quarter that ended on December 31, 2015 as compared to Rs 2,910.06 crore posted in the same quarter of the previous fiscal.

ONGC and Coal India fell between 3.5%-4.7% ahead of December quarter earnings due to be slated today.

Tata Motors dropped 4% after it reported a 2% decline in consolidated net profit at Rs 3,508 crore for the quarter ending December 2015 as against Rs 3,580 crore in December 2014.

Bank of India fell 6% after the bank reported a net loss of Rs 1,505.58 crore in December quarter as compared to net profit of Rs.173 crore a year ago.

Jubilant Foodworks cracked 11% after the Q3 net profit stood at Rs 31.7 crore, down 3%. Meanwhile, the total income for the quarter stood at Rs 634 crore.

Petronet LNG dropped 2% after the total income fell 54% in December quarter to Rs 5,204 crore as compared to Rs 11,225 crore a year ago.

Dr Reddy’s Laboratories pared its intra-day gains and closed 0.7% lower after the company said its board will meet on 17 February to consider buyback of equity shares.

Cipla’s Dember quarter came below street expectations. The profitability declined and its pre-tax profit falls by 13% in the December quarter. But the drug maker blamed this on a change in its sales distribution policy for India. However, the stock recovered from day’s low and ended over 0.5% higher.