Sensex closes below 24,000 mark

Indian markets joined their Asian counterparts like China, Japan and Philippines in ‘bear territory’ on Thursday. A fall of 20 per cent from the recent peak is defined as bear market. After a volatile day, the benchmark Sensex closed below psychologically crucial 24,000-mark for the first time since May 15, 2014, a day before the Narendra Modi-led government came to power.

The 30-share index of bluechip companies is 20 per cent below its all-time closing high of 29,681.77, reached on January 29, 2015. Wealth worth nearly Rs 14 lakh crore has been eroded during this period. On Thursday, Sensex ended at 23,962.21, down 99.83 points, or 0.41 per cent, from the previous day’s close.

Most major Asian markets and European markets such as Germany, France and the UK have entered bear territory recently. Interestingly, the US is one of the few major markets which haven’t plunged into bear zone yet.

Market players say if the domestic market continues to trade at current levels for a week, it would be a confirmation of bear market. On Thursday, the 50-share NSE Nifty closed at 7,276.80, down 32.5 points, or 0.44 per cent. The gauge was 19.1 per cent below its all-time closing high of 8,996.25, touched on March 3, 2015.

On Thursday, Japan and China fell over 2.5 per cent each following a sharp drop in the US markets a day earlier.

European markets were trading marginally higher at the time of closing of the Indian markets as oil prices steadied around $28 a barrel. “With oil prices correcting, investors are getting worried of a global slowdown. This is a typical phase where all news gets treated as bearish news,” said Ramesh Damani, member, BSE. “What is happening with China, oil and interest rates, is a reason to be optimistic rather than pessimistic.”

 

Uncertainty around China and world economy amid 12-year low oil prices had triggered a wave of selling across global equities on Wednesday.

Huge foreign capital outflows have seen the benchmark Sensex and Nifty indices fall more than 8 per cent over the past three weeks. Foreign institutional investors (FII) on Thursday sold shares worth nearly Rs 1,750 crore, extending their recent selling. Since the start of the year, FIIs have pulled out nearly Rs 12,000 crore from the Indian stocks. The FII sell-off has weakened the rupee below 68 against the dollar to its lowest level since August 28, 2013.

International investors are pulling out from emerging markets, including India, and moving to safe assets like the US Treasury and gold. Domestic money managers, however, continue to remain positive on the equity markets in medium-term on hopes of recovery in the earnings and improvement in the economy with the help of reforms. Domestic institution, including mutual funds and insurance companies, have pumped in over Rs 10,000 crore into stocks since the start of the year.

On Thursday, there were net buyers to the tune of Rs 1,270 crore, provisional data showed. From our past experiences, such periods of intensive selling have proved good buying opportunities for long-term investors, said S Naren, chief investment officer (CIO), ICICI Prudential AMC.

“Investors who bought in 1998, 2002 and 2008 crisis had actually made money,” he said.

Meanwhile, on Thursday, the beaten-down banking stocks tried to stage a comeback with Axis Bank gaining 5 per cent, State Bank of India adding 1.2 per cent and ICICI Bank gaining nearly a per cent. On the other hand, shares of automobile companies posted sharp declines on concerns over slowdown in China. Maruti Suzuki and Tata Motors fell around 4 per cent each.