A renewed sell-off in metal stocks led the carnage on the domestic bourses in mid-afternoon trade. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit their lowest level in more than 10 months. The 50-unit CNX Nifty was currently hovering below the psychological 8,000 mark. Earlier, the Nifty had regained the psychological 8,000 mark after falling below that level at the onset of the trading session. The Sensex fell below the the psychological 26,000 level after after falling below the psychological 26,000 at the onset of the trading session. The Sensex was currently off down 1,380.68 points or 5.05% at 25,985.39. The sharp setback on the Indian bourses was triggered by a rout in Asian stocks.
The broad market depicted weakness. There were more than nine losers against every gainer on BSE. The BSE Mid-Cap index was off 6.85%. The BSE Small-Cap index was off 7.61%. The decline in both these indices was higher than the Sensex's decline in percentage terms.
Chinese stocks led a sell-off in Asian markets as fears about the deepening effects of a slowdown in China's economy rattled investors. The sharp setback in Chinese stocks materialized as an expected action over the weekend from China's central bank to provide more support for the country's financial system did not come through. US stocks tumbled during the previous trading session on Friday, 21 August 2015, as fears about China's economy and global growth spurred heavy selling. Trading in US index futures indicated that that the US stocks will tumble again at the opening bell today, 24 August 2015. European stocks edged lower, extending a selloff in global equities spurred by worries that China's economy is slowing down more than anticipated.
FMCG shares declined. Auto stocks slumped.
Meanwhile, Finance Minister Arun Jaitley expects Indian financial markets to stabilize soon, according to news reports. Jaitley has attributed the current turmoil in Indian financial markets to external factors, according to reports. Meanwhile, Reserve Bank of India Governor Raghuram Rajan said at a banking conference in Mumbai today, 24 August 2015, that it is not the role of the central bank of a country to elevate sentiments unduly to deliver booster shots to the stock market.
There was heavy selling of Indian stocks by foreign portfolio investors (FPIs) during the previous trading session on Friday, 21 August 2015. FPIs sold shares worth net Rs 2340.60 crore on Friday, 21 August 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 1524.10 crore on Friday, 21 August 2015, as per provisional data released by the stock exchanges.
Indian stocks may remain volatile in the near future as traders roll over positions in the futures & options (F&O) segment from the near month August 2015 series to September 2015 series. The near month August 2015 derivatives contracts are set to expire on Thursday, 27 August 2015.
At 14:16 IST, the S&P BSE Sensex was down 1,380.68 points or 5.05% at 25,985.39. The index fell 1,392.73 points at the day's low of 25,973.34 in mid-afternoon trade, its lowest level since 17 October 2014. The index fell 635.67 points at the day's high of 26,730.40 at the onset of trading session.
The CNX Nifty was down 473.45 points or 5.70% at 7,826.50. The index hit a low of 7,823.60 in intraday trade, its lowest level since 17 October 2014. The index hit a high of 8,060.05 in intraday trade.
The BSE Mid-Cap index was down 768.31 points or 6.85% at 10448.34. The BSE Small-Cap index was down 883.10 points or 7.61% at 10,727.34. The decline in both these indices was higher than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was extremely weak. There were more than nine losers against every gainer on BSE. 2,409 shares fell and 266 shares rose. A total of 44 shares were unchanged.
Bharat Heavy Electricals (Bhel) was down 9.12% to Rs 226.25. The stock hit a high of Rs 245 and a low of Rs 225.55 so far during the day.
Tata Steel was down 8.96% to Rs 216. The stock hit a high of Rs 230.90 and a low of Rs 215.60 so far during the day.
ICICI Bank was down 6.11% to Rs 278. The stock hit a high of Rs 284.70 and a low of Rs 276.80 so far during the day.
FMCG shares declined. Tata Global Beverages (down 9.17%), Jyothy Laboratories (down 8.47%), Britannia Industries (down 6.91%), Godrej Consumer Products (down 4.75%), Dabur India (down 4.57%), Marico (down 3.99%), Colgate Palmolive (India) (down 2.05%), Procter & Gamble Hygiene & Health Care (down 2.03%), GlaxoSmithKline Consumer Healthcare (down 1.61%), Bajaj Corp (down 1.06%) and Hindustan Unilever (down 0.91%), edged lower. Nestle India was up 0.34%.
Auto stocks slumped. Escorts (down 12.23%), Ashok Leyland (down 8.57%), Bajaj Auto (down 8.06%), Eicher Motors (down 7.64%), Tata Motors (down 6.16%), TVS Motor Company (down 6.12%), Maruti Suzuki (India) (down 5.84%), Mahindra & Mahindra (down 4.27%) and Hero MotoCorp (down 3.38%) edged lower.
In the global commodities markets, Brent crude oil futures edged lower as concerns about a global supply glut added to worries over potentially weaker demand from China. Brent for October settlement was currently off $1.33 a barrel at $44.13 a barrel. The contract had fallen $1.16 a barrel or 2.49% to settle at $45.46 a barrel during the previous trading session.
India imports about 80% of its crude requirements and a decline in crude eases concerns on fiscal deficit, inflation and gives more room for the government to boost growth through spending on infrastructure. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports.
In the foreign exchange market, the rupee fell below 66 against the dollar. The partially convertible rupee was hovering at 66.62, compared with its close of 65.83 during the previous trading session.
Meanwhile, Reserve Bank of India Governor Raghuram Rajan was quoted as saying at a banking conference today, 24 August 2015, that the RBI has no hesitation in using the foreign exchange reserves when appropriate to reduce volatility in the rupee. India has steadily built up its foreign exchange reserves to a record high of more than $355 billion since Rajan took the helm of the RBI in September 2013, when the rupee was in the midst of its worst crisis in more than two decades.
Meanwhile, a committee headed by A.P. Shah, chairman of the Law Commission, has reportedly suggested sparing foreign portfolio investors (FPIs) from the levy of minimum alternate tax (MAT) for the period prior to 1 April 2015. If the government accepts the recommendations of the committee, it would provide a significant relief to foreign investors facing several years of levies on capital gains made by them. In the February 2015 Budget, the government had exempted FPIs from MAT starting 1 April 2015, but had not made the clarification retrospective. The tax row started after the income-tax department started demanding MAT from foreign investors on capital gains accruing to them from the sale of shares, citing an August 2012 order by the Authority for Advance Rulings (AAR) in the case of Castleton Investment that MAT is applicable to both domestic and foreign companies. MAT is a tax levied on profit-making entities that don't pay corporate income tax because of exemptions and incentives. FPIs have argued that MAT is applicable only to domestic companies that have a base in India. The government appointed the Shah panel to defuse the row that threatened India's image as an investment destination. The Shah committee submitted its report to the government last month. The tax department had earlier clarified that MAT will not apply to investment routed through countries with which India has a tax treaty.
Meanwhile, India's weather office, the India Meteorological Department (IMD), said in a daily report issued yesterday, 23 August 2015, that for the country as a whole, cumulative rainfall during this year's monsoon season was 10% below the Long Period Average (LPA) until 23 August 2015. Region wise, the rainfall was 13% below the LPA in Central India, 6% below the LPA in East & Northeast India, 3% below the LPA in Northwest India and 1% below the LPA in South Peninsula until 23 August 2015.
The June-September southwest monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation.
In overseas markets, European stocks edged lower today, 24 August 2015, extending a selloff in global equities spurred by worries that China's economy is slowing down more than anticipated. Key indices in Germany, UK and France were off 2.55% to 2.76%.
Chinese stocks led a sell-off in Asian markets as fears about the deepening effects of a slowdown in China's economy rattled investors. In mainland China, the Shanghai Composite was off 8.49%. In Hong Kong, the Hang Seng index was off 5.17%. The sharp setback in Chinese stocks materialized as an expected action over the weekend from China's central bank to provide more support for the country's financial system did not come through. China's surprise move to devalue its yuan two weeks ago which could make its exports more competitive and a string of weak data signal the economy may be feebler than expected, despite a campaign to rev up growth including interest rate cuts and measures to boost lending.
In other Asian markets, key benchmark indices in Indonesia, Japan, Singapore, South Korea and Taiwan were off 2.47% to 4.61%.
Trading in US index futures indicated that the Dow could slump 358 points at the opening bell today, 24 August 2015. US stocks tumbled on Friday, 21 August 2015, as fears about China's economy and global growth spurred heavy selling.
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