Indian equity benchmarks slaughtered for fourth consecutive session Thursday, tracking global rout after Chinese shares suspended trading in early trade and sharp fall in crude oil prices. All sectoral indices ended in red.
Indices ended at four-month closing low. The 30-share BSE Sensex fell below 26000-mark to hit its lowest level (of 24825.70) in 52 weeks, weighed down by auto and commodity stocks. The index plunged 554.50 points or 2.18 percent to 24851.83.
The 50-share NSE Nifty crashed 172.70 points or 2.23 percent to 7568.30 after hitting an intraday low of 7556.60.
The market may continue to track global factors in near term, feel experts, saying 7500 could be strong support on the Nifty.
Ajay Srivastava of Dimensions Capital says the market is still underestimating impact the devaluation will have. He feels the market may see one more gut-wrenching fall before the Union Budget 2016-17.
The broader markets also got butchered today with the BSE Midcap and Smallcap indices falling 2.6 percent and 2.9 percent, respectively. The market breadth was pathetic as more than three shares declined for every share advancing on the Bombay Stock Exchange.
China was the main cause of concern today. Shanghai halted for trading within 30 minutes of opening after shares tumbled more than 7 percent, triggering a circuit breaker following a further devaluation of yuan. Market’s circuit breaker was triggered for the second time. Other Asian markets fell 1-3 percent.
European markets like Britain’s FTSE and France’s CAC were down 2.6 percent each (at 16 hours IST). Germany’s DAX index fell below 10,000 for the first time since mid-October, down 3 percent.
Brent crude oil slipped to lowest level since April 2004, falling below USD 33 a barrel intraday (down 5 percent) but managed to recoup some of losses later on. NYMEX hit seven-year low intraday on massive stockpiles of unwanted crude and refined products.
Following yuan devaluation, the rupee fell 11 paise to 66.93 a dollar. The Japanese yen surged to 117 against the US dollar while Australian dollar (seen as a liquid proxy to the yuan) tumbled to a three-month low. Other regional currencies also followed suit. South Korean won test four-month low against US dollar. Malaysian ringgit slipped to a three-month low and Singapore dollar was down to a six-year low against the greenback.
Back home, Tata Motors was the biggest contributor to Sensex’s fall, down more than 6 percent on China rout. Its subsidiary Jaguar Land Rover gets 15 percent of sales from the world’s second largest economy, which was already declined from 30 percent earlier.
Maruti Suzuki lost 4.8 percent as Japanese yen appreciation will hit its operating profit margin. Analysts say every 1 percent appreciation in yen means 15 basis points negative impact on the four-wheeler’s margins. Maruti’s exposure to the yen is in form of royalty paid to Suzuki and import of raw material.
Commodity stocks such as Tata Steel (down 7 percent), Vedanta (down 9 percent) and Hindalco (down 5 percent) too were under pressure on the back of a global risk off and as a devalued yuan could lead to further imports into India.
Axis Bank plunged 5 percent. Media reports suggested that the government is likely to consider selling stake in the bank.
Among others, state-run power equipment maker BHEL crashed 7 percent followed by HDFC, Reliance Industries, ITC, Infosys, L&T, SBI, HDFC Bank and ICICI Bank with 1-3 percent loss.