Revaluation of Chinese yuan coupled with the upcoming key economic data points to subdued investor sentiments - leading a barometer index of the Indian equity markets to plunge 195 points during the late afternoon session on Tuesday.
The barometer 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE) decline by over 195 points or 0.70 percent.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) was also trading in the red. It was trading lower by 63.35 points or 0.74 percent at 8,462.25 points.
The S&P BSE Sensex, which opened at 28,193.26 points, was trading at 27,905.88 points (2.05 p.m.), down 195.84 points or 0.70 percent from the previous day's close at 28,101.72 points.
The Sensex touched a high of 28,205.12 points and a low of 27,876.07 points in the intra-day trade so far.
Analysts said the revaluation of the yuan, which is intended to boost exports, has made investment in China cheaper. This is leading foreign investments away from India.
The move has also strengthened the dollar value, which has negatively impacted major world currencies including the Indian rupee.
"The revaluation of yuan is a major reason for the subdued sentiments. The currency wars have started at a time when the world economy is stalling, commodities prices are falling and the Chinese markets are bleeding," Alex Mathews, head of research with Geojit BNP Paribas, told IANS.
"The Indian rupee has fallen to Rs.64 a dollar. However, the move has helped the information technology (IT) and other exports related stocks."
Investors are also anxious over the upcoming key economic data points of Consumer Price Inflation (CPI) and Index of Industrial Production (IIP).
"There is very little hope of any positive surprises from the CPI or the IIP, despite good monsoon and pick-up in demand," Mathews elaborated.
Devendra Nevgi, chief executive of ZyFin Advisors, told IANS that the markets were upset over the logjam in parliament.
The monsoon session of parliament ends on August 13 with fate of key legislations like the GST (goods and services) or the land bill hanging in the balance.
"There is still hope that the government will find a way to pass and implement the GST bill. However, the continuing logjam has provoked bearish sentiments," Nevgi said.
"However, the signals that are coming -- like a proposed joint special session to get the bill passed -- are very encouraging."
Sector-wise, all 12 sub-indices of the S&P BSE except the information technology (IT) and technology, entertainment and media (TECK) index were trading in the red.
The S&P BSE banking index decreased by 296.32 points, followed by automobile index which receded by 282.32 points, capital goods index declined by 270.75 points, metal index edged-lower by 207.43 points and oil and gas index fell by 108.22 points.
However, the S&P BSE IT index gained by 145.23 points and TECK index rose by 52.77 points.
