A rout in Chinese stocks hurt sentiment adversely in global markets, with key equity benchmark indices in India extending intraday losses in early afternoon trade. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both hit their lowest level in more than a week. The broad market depicted weakness. There were almost three losers against every gainer on BSE. The Sensex was currently trading below the psychological 28,000 mark. Earlier, the Sensex had regained the psychological 28,000 mark in morning trade after falling below that level at the onset of the trading session. The Sensex fell below the psychological 28,000 mark at the onset of the trading session as the index opened with a downward gap.
A three-week selloff in China's stock market has darkened the outlook for the world's second-largest economy. Stocks edged lower across Asia and trading in US index futures indicated a weak opening of US stocks later in the global day. The Sensex was currently off 502.51 points or 1.78% at 27,669.18. The BSE Mid-Cap index was off 1.68%. The BSE Small-Cap index was off 1.53%.
Shares of Vedanta tumbled. Telecom stocks declined. Realty stocks also edged lower.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 23.54 crore yesterday, 7 July 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 94.71 crore yesterday, 7 July 2015, as per provisional data released by the stock exchanges.
In overseas markets, Chinese stocks tumbled after the country's securities regulator warned investors were in the grip of "panic sentiment". US stocks ended with modest gains yesterday, 7 July 2015, as speculation grew that Greece's crisis would be contained.
At 12:23 IST, the S&P BSE Sensex was down 502.51 points or 1.78% at 27,669.18. The index lost 504.63 points at the day's low of 27,667.06 in early afternoon trade, its lowest level since 30 June 2015. The index fell 140.24 points at the day's high of 28,031.45 in opening trade.
The 50-unit CNX Nifty was down 152 points or 1.79% at 8,358.80. The index hit a low of 8,348.15 in intraday trade, its lowest level since 30 June 2015. The index hit a high of 8,457.50 in intraday trade.
The market breadth indicating the overall health of the market was quite weak. There were almost three losers against every gainer on BSE. 1,805 shares declined and 618 shares rose. A total of 81 shares were unchanged.
The BSE Mid-Cap index was off 185.46 points or 1.68% at 10,834.53. The BSE Small-Cap index was off 175.61 points or 1.53% at 11,322.71. The decline in both these indices was lower than the Sensex's decline in percentage terms.
The total turnover on BSE amounted to Rs 2536 crore by 12:15 IST compared with turnover of Rs 1913 crore by 11:15 IST.
Telecom stocks declined. Bharti Airtel (down 1.73%), Idea Cellular (down 1.85%), MTNL (down 5.81%), Tata Teleservices (Maharashtra) (down 2.98%) and Reliance Communications (down 1.79%) fell.
Vedanta dropped 9.18% to Rs 144. The stock hit a 52-week low of Rs 140 in intraday trade today, 8 July 2015.
Realty stocks declined. DLF (down 3.07%), Indiabulls Real Estate (down 3.65%), Housing Development and Infrastructure (down 4.51%), D B Realty (down 1.09%), Unitech (down 3.38%), Sobha (down 1.99%), Godrej Properties (down 0.06%), Oberoi Realty (down 0.69%) and Parsvnath Developers (down 4.11%) fell.
Meanwhile, India's weather office, the India Meteorological Department (IMD), said in its daily monsoon update issued yesterday, 7 July 2015, that the Southwest Monsoon was active over Gangetic West Bengal, Jharkhand, Bihar, West Uttar Pradesh, Uttarakhand and Haryana, Chandigarh & Delhi and was normal over Nagaland, Manipur, Mizoram & Tripura, East Uttar Pradesh, Himachal Pradesh, West Rajasthan and Chhattisgarh during the past 24 hours until 8:30 IST.
For the country as a whole, cumulative rainfall during this year's monsoon season was 2% below the Long Period Average (LPA) until 7 July 2015. Region wise, the southwest monsoon was 12% above the LPA in Northwest India, 5% below the LPA in Central India and 4% below the LPA each in South Peninsula and East & Northeast India until 7 July 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, Chinese stocks tumbled today, 8 July 2015, after the country's securities regulator warned investors were in the grip of "panic sentiment". In mainland China, the Shanghai Composite index was off 5.78%. In Hong Kong, the Hang Seng index was off 6.98%.
The heavy losses came despite a rare pledge early today, 8 July 2015, by the People's Bank of China that it would closely monitor stock movements and continue to use various means to support the state-backed margin-finance entity China Securities Finance Corp. (CSF) in order to protect market stability.
A spokesman of the China Securities Regulatory Commission, Deng Ge, described the current market mood as "panic sentiment", according to news reports.
China has put an arsenal of measures to work in recent days to stem the selloff that has wiped out roughly $2.4 trillion in value from China's equities. The China Securities Regulatory Commission today, 8 July 20015, announced that the China Securities Finance Corp., a commission unit that provides financing for margin trading, will increase purchases of small-cap stocks. The move follows an earlier pledge by the company to buy blue-chip shares to stabilize the market. China's central bank also said it would help ensure the China Securities Finance Corp. has ample liquidity to stabilize the market. The state-backed company may tap the interbank market, issue bonds, use mortgage financing and borrow from relending facilities, the People's Bank of China said in a statement.
Over the weekend, Beijing suspended initial public offerings and made it easier for investors to borrow to buy stocks.
The sharp slide in Chinese stocks weighed on other Asian markets. Key benchmark indices in Singapore, Taiwan, Japan, Indonesia and South Korea were off 0.34% to 2.96%.
Trading in US index futures indicated that the Dow could fall 168 points at the opening bell today, 8 July 2015. US stocks ended with modest gains yesterday, 7 July 2015, as speculation grew that Greece's crisis would be contained.
In economic data, the US trade deficit rose 2.9% in May, mostly because the US exported fewer aircraft and other manufactured goods. Another data released by the US Department of Labor yesterday, 7 July 2015, showed that job openings at US workplaces rose to a record high of 5.36 million in May (data go back to the end of 2000) from 5.33 million in April.
Meanwhile, investors are now looking ahead to the minutes from the Federal Reserve's June meeting, which are set to be released today, 8 July 2015. The International Monetary Fund yesterday, 7 July 2015, warned of the risks of raising rates too early in the US and called for the Fed to delay a raise until 2016.
In Europe, following the emergency euro zone summit in Brussels yesterday, 7 July 2015, European leaders gave debt-stricken Greece a final deadline of Sunday to reach a new bailout deal and avoid Greece's exit from the euro zone. Representatives of the 19-country euro zone said all 28 European Union leaders would meet on Sunday, 12 July 2015, to decide Greece's fate. The talks were organized after Greeks voted in a referendum on Sunday, 5 July 2015, against a bailout that carried stringent austerity measures.
Meanwhile, Greek Prime Minister Alexis Tsipras yesterday, 7 July 2015, said he wanted a "socially just and economically viable agreement". The process will be fast, he said.
Without some new cash in the coming weeks, Greece won't be able to make a euro 3.5 billion ($3.8 billion) bond payment to the European Central Bank (ECB) which is payable on 20 July 2015. Such a nonpayment could push the ECB to cut emergency lending to Greek banks--a move that would send the country's financial system into meltdown and force the government to print its own money to recapitalize them. Greek banks have been shut for more than a week, after the ECB put a limit on the emergency loans they had been drawing to buffer growing deposit outflows. Cash withdrawals from ATMs have been limited to euro 60 a day and depositors are unable to transfer money abroad.
Some short-term funding and the prospect of a longer-term bailout deal from the rest of the eurozone could allow Greece--and the ECB--to let banks reopen and normal economic activity in the country to resume.
Greece's last bailout expired last Tuesday and Greece missed a euro 1.6 billion payment to the IMF.
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