Metal and banking stocks led losses as key benchmark indices plunged. High volatility was witnessed during the latter part of the trading session. The barometer index, the S&P BSE Sensex, hit its lowest level in more than a week in late trade. Earlier during the trading session, the 50-unit CNX Nifty too had hit its lowest level in more than a week in early afternoon trade. The Sensex fell below the psychological 28,000 mark. The Sensex was provisionally off 523.72 points or 1.86% at 27,647.97. The steep slide for key equity benchmark indices in India was triggered by a sharp setback in Chinese stock market. A three-week selloff in China's stock market has darkened the outlook for the world's second-largest economy.
The market breadth indicating the overall health of the market was weak. The BSE Mid-Cap index was off 1.39%. The BSE Small-Cap index was off 1.4%.
Metal and mining stocks fell as global commodity prices dropped amid a dimming outlook for China's economy. Index heavyweight and housing finance major HDFC dropped. Index heavyweight and software major Infosys declined. Index heavyweight and cigarette major ITC fell.
In overseas markets, Chinese stocks tumbled after the country's securities regulator warned investors were in the grip of "panic sentiment". Japanese stocks fell sharply as jitters over Chinese market volatility, combined with concerns over Greece's debt heightened risk-off sentiment. Trading in US index futures indicated a weak opening of US stocks later in the global day.
As per provisional closing, the S&P BSE Sensex was down 523.72 points or 1.86% at 27,647.97. The index lost 535.97 points at the day's low of 27,635.72 in late 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 158.15 points or 1.86% at 8,352.60. The index hit a low of 8,341.40 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 weak. On BSE, 1,793 shares fell and 953 shares rose. A total of 112 shares were unchanged.
The BSE Mid-Cap index was off 153.48 points or 1.39% at 10,866.51. The BSE Small-Cap index was off 160.86 points or 1.4% at 11,337.46. The decline in both these indices was lower than the Sensex's decline in percentage terms.
The total turnover on BSE amounted to Rs 4036 crore, higher than turnover of Rs 3018.70 crore registered during the previous trading session.
Index heavyweight and housing finance major HDFC dropped 3.88% to Rs 1,285.50. The stock hit high of Rs 1,332 and low of Rs 1,285.35 in intraday trade.
Index heavyweight and software major Infosys declined 2.55% to Rs 957. The stock hit high of Rs 985 and low of Rs 955 in intraday trade.
Index heavyweight and cigarette major ITC fell 1.53% to Rs 312.20. The stock hit high of Rs 317.40 and low of Rs 309.80 so far during the day.
Metal and mining stocks fell as global commodity prices dropped amid a dimming outlook for China's economy. China is the world's largest consumer of steel, copper and aluminum. JSW Steel (down 3.73%), Tata Steel (down 5.09%), Steel Authority of India (Sail) (down 6.01%), National Aluminium Company (down 1.65%), Hindustan Zinc (down 1.95%), Jindal Steel & Power (down 1.7%), NMDC (down 1.95%), Hindustan Copper (down 3.49%) edged lower.
Vedanta dropped 8.58% to Rs 144.95. The stock hit a 52-week low of Rs 140 in intraday trade today, 8 July 2015.
Shares of Hindalco Industries were off 5.17% to Rs 101.70. The stock hit a 52-week low of Rs 99.20 in intraday trade today, 8 July 2015. With respect to news article titled, "PIL on Hindalco: I-T Dept filed report, estimates that Hindalco dealing with unaccounted cash worth Rs 200 crore - Hindalco paid Rs 7 crore in kickbacks to environment ministry", Hindalco Industries clarified after market hours yesterday, 7 July 2015, that there was nothing new in the allegations and the matter is already under investigation. The company reiterated that neither the diary nor the cash recovered belongs to the company. The Central Bureau of Investigation (CBI) had raided Hindalco's offices in four cities as part of its investigations into alleged illegalities in the allocation of two coal blocks in Odisha.
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, European stocks edged higher today, 8 July 2015, after Greece's Prime Minister Alexis Tsipras told the European Parliament today, 8 July 2015, that Greece will submit a detailed reform proposal to its international creditors in the next few days. Key indices in UK, France and Germany were up 0.14% to 0.55%. In Spain, the IBEX 35 index was up 0.33%. In Italy, the FTSE MIB index was up 0.84%
Investors continue to monitor developments on Greece's debt crisis. Greece will submit a detailed reform proposal in the next few days, in a bid to unlock further bailout aid, the country's Prime Minister Alexis Tsipras reportedly told the European Parliament today, 8 July 2015. Referring to his country's resounding "no" in Sunday's referendum, Tsipras stressed the vote wasn't a signal for Greece to break with Europe, but to return to the negotiating table with a stronger mandate.
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.
European Central Bank Governing Council member Christian Noyer reportedly said today, 8 July 2015, that there will be no more emergency lending to Greek banks if the country's government fails to secure a bailout deal with lenders. Speaking on French radio station Europe 1, Noyer warned that there must be an agreement by 12 July 2015 otherwise it "will be too late and the consequences will be grave", media reports 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.
In Asia, 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 lost 5.9%. In Hong Kong, the Hang Seng index lost 5.84%.
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 0.7% to 3.14%.
Trading in US index futures indicated that the Dow could fall 173 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.
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