Bears reigned over Dalal Street on first day of the week as equity benchmarks crashed more than 2 percent following steep correction in Chinese markets on slowdown fears and geopolitical tensions. All sectoral indices ended in red. The broader markets were also under pressure.
The market saw biggest single day fall in four months. The 30-share BSE Sensex plunged 537.55 points or 2.05 percent to 25623.35 and the 50-share NSE Nifty lost 171.90 points or 2.16 percent to 7791.30, weighed down by banking & financials, auto and technology stocks. The BSE Midcap and Smallcap indices were down over a percent.
The market may see some more correction but big fall may not be seen as it has major support from domestic investors, feel experts.
Tirthankar Patnaik of Mizuho Bank says while the slowdown in China is known, the pace is still unknown. Not only Chinese PMI, but also Indian PMI came in at multi-month low.
He believes India will be one of the fastest growing economies in 2016, though earnings are not likely to improve anytime soon. He also doesn’t expect portfolio positioning to change anytime soon — it will continue to be local over global. Despite this, he does not rule out Nifty revisiting 7500 level in the next three months, but the probability of it going below that is quite low.
Global markets started off first day of the year 2016 on a weak note with the China leading fall. China’s Shanghai Composite crashed 6.86 percent today, spurring a trading halt for rest of the session, and dragging global stock markets lower after feeble manufacturing surveys revived concerns over the mainland’s economic slowdown.
Its Caixin December manufacturing PMI was down at 48.2, compared with 48.6 in November, which continued to be weak for the 10th consecutive month. Hang Seng was down 2.7 percent and Nikkei fell 3 percent. In Europe, FTSE, CAC and DAX were down between 2-4 percent (at 16 hours IST).
Back home, Indian manufacturers saw business conditions deteriorate at the end of 2015. December’s incessant rainfall in Chennai impacted heavily on the sector, with falling new work leading companies to scale back output at the sharpest pace since February 2009, says Nikkei Markit. Nikkei India Manufacturing PMI declined to 49.1 in December from 50.3 in November.
The rupee closest at lowest level since December 16, down 48 paise to 66.61 a dollar on global meltdown.
Tata Motors was the biggest loser among Sensex 30 following China slowdown fears, down 6 percent. China’s contribution to Jaguar Land Rover’s global sales stood at around 15 percent, reduced from 30 percent earlier.
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Bharti Airtel and Idea Cellular dropped 4-5 percent after the telecom regulator has written to operators to ensure compliance with call drop regulations, effective January 1.
Among others, HDFC, Infosys, ICICI Bank, Reliance Industries, L&T, SBI, Lupin, BHEL, Sun Pharma and Hindalco Industries were down 2-5 percent.
Wipro outperformed, rising 0.3 percent. After market hours, the IT services provider announced changed in management. Abidali Neemuchwala will replace TK Kurien as CEO & member of the board from February 1 while TK Kurien will become executive vice chairman.
In broader space, Ashok Leyland gained 3.6 percent on reporting a 31 percent growth in December sales. Punj Lloyd rallied 6 percent on getting four highway EPC projects worth Rs 1,555 crore while IRB Infrastructure rose 5 percent on bagging biggest order worth Rs 10,050 crore for tunnel constuction in Jammu & Kashmir.
The market breadth was negative as about 1598 shares declined against 1293 advancing shares on the Bombay Stock Exchange.