Great fall of Chinese markets plunges Indian equities

Mumbai, Jan 7 (IANS) Panic selling triggered by the Chinese markets’ rout dragged a bellwether index of the Indian equities to close at its lowest level in the last 19 months.

The sell-off by panicked investors dragged down the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) to a new 52-week low during the intra-day trade.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) also receded close to its 52-week and closing lows.

All the 30 shares which make up the Sensex basket, and 50 scrip which constitute the NSE Nifty closed in the red.

During the last four sessions, the barometer Sensex has plunged by 1,309.51 points, while NSE Nifty has dwindled by 395.35 points.

On Thursday, both the bellwether indices opened on a negative note following a rout in the Asian markets which was triggered by an accelerated devaluation of the Chinese yuan.

The benchmark Shanghai Composite Index declined by 7.32 percent. The dive led to a halt in the day’s trade, as the circuit breaker mechanism was triggered for a second time during this week.

The Chinese markets’ fall dented other global bellwethers, including the Japanese, Australian and European indices.

Moreover, the negative bias was supported by the upcoming US non-farm payroll figures scheduled for release on late Thursday India time. The data can provide indications on future US rate hikes.

In addition, geo-political tensions in the Middle East and North Korea testing a thermo-nuclear device on Wednesday eroded investors’ confidence.

Besides, caution prevailed over the upcoming domestic macro-data on industrial output, retail inflation and the third-quarter earning results which start coming in from January 12.

However, markets seemed to have ignored the positives, especially the release of latest FOMC (Federal Open Market Committee) meeting minutes which indicated that the US Fed might delay another round of rate hike.

Even the fact that international oil prices tumbled to under $30 per barrel level or the central government’s effort to reach out to the opposition to break the Goods and Services Tax (GST) Bill impasse, did not elicit a positive response from the markets.

This led to the S&P BSE Sensex to crash by 554 points, or 2.18 percent during the day’s trade.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) ended the day’s trade deep in the red. It also plunged by 173 points, or 2.23 percent at 7,568.30 points.

The Sensex of the S&P BSE, which opened at 25,224.70 points, closed at 24,851.83 points – the lowest in last 19 months – down 554.50 points, or 2.18 percent from the previous day’s close at 25,406.33 points.

In intra-day trade, the Sensex touched a high of 25,230.35 points and a low of 24,825.70 points — the new 52-week low.

The S&P BSE market breadth favoured the bears – with 2,228 declines and 663 advances.

“The fall of Chinese markets battered sentiments and spooked investors. With no fresh positive triggers investors went in for panic selling,” Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

Nitasha Shankar, vice president for research with YES Securities, elaborated that headline index Nifty has lost 5 percent this week, making it one of the worst starts to a calendar year.

“Investors will watch out for US jobs and unemployment data this week or further cues,” pointed-out Vaibhav Agarwal, vice president and research head at Angel Broking.

Sector-wise, automobile, capital goods, banking, healthcare and metal indices came under selling pressure.

The S&P BSE automobile index plunged by 669.43 points, capital goods index plummet by 447.15 points, banking index receded by 446.49 points, healthcare index declined by 351.65 points and metal index edged-down by 275.05 points.

The foreign institutional investors (FIIs) were net sellers during the day’s trade, while domestic institutional investors (DIIs) were net buyers.

According to data with stock exchanges, FIIs divested Rs.1,051.74 crore, while DIIs bought stocks worth Rs.109.86 crore.

Apart from equities, the rupee got battered during the day’s trade. It weakened by 10 paise to close at 66.93 to a US dollar from its previous close of 66.83 to a greenback.

Major Sensex losers during Thursday’s trade were BHEL, down 6.98 percent at Rs.153.85; Tata Steel, down 6.85 percent at Rs.250.10; Tata Motors, down 6.15 percent at Rs.343.20; Axis Bank, down 4.98 percent at Rs.409.35; and Maruti Suzuki, down 4.75 percent at Rs.4,266.55.

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