The News International Team
The BSE Sensex on Tuesday plunged more than 500 points and the NSE Nifty closed below the psychological 8100-mark on panic selling triggered by further fall in rupee and global growth worries post weakening crude oil prices.
The deep cuts seen in the Indian equity market is a spillover effect seen on the back of negativity on global markets and expectations of a slowdown in China, Japan and Europe, says Dhananjay Sinha, Head – Institutional Research, Emkay Global Financial Services.
Sunil Garg of JPMorgan is not bearish on global growth. Infact global growth will rebound from 2.5-3 percent next year, he says, adding this sell off provides a buying opportunity in the markets.
The sell-off in banks, FMCG and metals stocks pulled the 30-share Sensex down 538.12 points or 1.97 percent to close below the 27000 level (for the first time since October 28) at 26781.44. The 50-share NSE Nifty lost 152 points or 1.85 percent to close at 8067.60 on unwinding of derivative positions as well as offloading of shares by momentum players among FIIs.
The broader markets also saw major selling pressure with BSE Midcap and Smallcap indices shedding 3 percent each.
The rupee plunged to a 13-month low on broad dollar strength, breaching 63-mark against US dollar following the global rout. It declined 59 paise to close at 63.53 a dollar despite RBI intervention during the day. According to traders, RBI may have sold dollars at around Rs 63.54 per dollar to stem the rupee fall.
Nizam Idris, head of EM FX Strategy, Macquarie says India may see some outflow of funds but that is nothing close to crisis. According to him, the Indian currency will stabilise if oil prices attain some stability. He expects the rupee to hover around 64-65 against the dollar going ahead.
Globally, Asian markets (barring Shanghai) closed lower. Hang Seng and Nikkei fell around points each, weighed down by the persisting slump in oil prices and weak US close last midnight. However, Shanghai gained 2.3 percent despite the Flash HSBC PMI for China slipped to 49.5 contracting for the first time in seven months, which fueled hopes of more stimulus measures.
European markets like CAC, DAX and FTSE gained 0.8 percent each (at 16 hours IST) post German PMI data.
Russian equity markets tumbled another 10 percent during the day post a 10 percent slide in previous session. Russian government is in the middle of an all–out fight to preserve the value of the ruble which hit an all-time low amidst plunging oil prices. The Russian central bank announced a stunning interest rate hike to 17 percent versus 10.5 percent in the middle of last night to stem the fall in currency.
Brent crude oil prices fell below the USD 60 for the first time since July 2009 today amid slowdown in world’s second largest economy China and fall in emerging market currencies. Brent crude was at 59.29 a barrel, down 2.9 percent and US crude was at 54.64 a barrel, down 2.27 percent (16 hours IST).
Losers & gainers
On the home turf, sellers targeted shares of both private and public sector banks today. The Bank Nifty was one of the worst performers among sectoral indices , crashing 542 points or 2.95 percent to close at 17,830.55.
India’s biggest lenders State Bank of India and ICICI Bank were down 4.66 percent and 4.3 percent, respectively followed by HDFC Bank and Axis Bank with more than 1 percent loss.
Metals shares lost the most among major largecaps as the BSE Metal index crashed 4 percent. Sesa Sterlite tanked nearly 8 percent and Tata Steel was down 3 percent.
Aluminium major Hindalco Industries lost 5.7 percent after the Special Court rejected the CBI closure report and has asked for further investigation in the coal scam case. Jindal Steel and Power was down 4 percent after the Supreme Court rejected the company’s plea to make coal mine payments in tranches.
Dr Reddy’s Labs plunged more than 6 percent as Russian ruble saw major correction that may impact revenues of the drug maker. About 17 percent of total revenues come from Russia and Venezuela.
Among others, shares of ITC, HDFC, Tata Motors, Reliance Industries, HUL, L&T, ONGC and NTPC were other prominent losers, down 1-3 percent. However, TCS bucked the trend, up 3.4 percent on depreciation in the rupee. In fact, BSE IT index gained 1.66 percent.
Shares of oil retailers HPCL and BPCL gained 1-2 percent after further fall in crude oil prices in the international market.
SpiceJet rebounded in last hour of trade, up 2.6 percent (after seeing 10 percent fall intraday) as the government allowed the airline company to book tickets beyond 30 days till March 31, 2015. Jet Airways was up 7 percent on hopes of getting more market share and likely fall in aviation turbine fuel prices.
About four shares declined for every share advancing on the Bombay Stock Exchange while on the National Stock Exchange, 1313 shares declined and 142 shares advanced.