Sensex plummets 770 pts in worst fall since July 8; Nifty ends at 10,798
Fears of economic slowdown sparked fears of further outflows by foreign institutional investors.
NEW DELHI: It turned out to be a Terrible Tuesday for investors on Dalal Street as benchmark indices plummeted over 2 per cent, logging their biggest point-wise drop since July 8.
Fears of an economic slowdown sparked fears of further outflows by foreign institutional investors after GDP growth slumped to 5 per cent, its lowest in six-years. Foreign investors pulled out a net amount of Rs 5,920 crore from the capital markets in August.
BSE Sensex tanked 770 points or 2.06 per cent to 36,563 while its NSE counterpart Nifty ended at 10,798, down 225 points or 2.04 per cent. Rs 3,00,000 crore of investor wealth was wiped out in today's mayhem.
Only two of 30 Sensex constituents ended in the green, namely Tech Mahindra and HCL Tech. ICICI Bank was the worst-performing stock, sliding as much as 4.45 per cent.
RIL, HDFC duo and ICICI Bank were among the top index drags.
Auto stocks witnessed bear hammering following subdued August sales numbers. The BSE Auto index ended 1.64 per cent down. BSE Bankex dropped 2.43 per cent. Barring IT, most sectors dropped close to 2 per cent.
BSE Midcap and BSE Smallcap indices shed 1.64 per cent and 1.32 per cent, respectively and fared better than Sensex.
The global environment too was subdued as global stocks slipped toward a two-month low, as US-China trade tensions drove investors to the relative shelter of gold, the Japanese yen and government debt.
The rupee witnessed heavy selling pressure amid trade war fears and strengthening US dollar.
Here are the top factors that dragged D-Street lower:
> Poor macroeconomic data
Back-to-back weak macroeconomic data hounded investors on D-Street after markets resumed trading on Tuesday. Besides the below than expected GDP numbers, official data on Monday showed that the growth of eight core industries has dropped to 2.1 per cent in July, mainly due to a contraction in coal, crude oil and natural gas production.
A private forecaster’s PMI data showed the country’s manufacturing sector activity declined to its 15-month low in August. The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) declined to 51.4 in August, its lowest mark since May 2018, from 52.5 in July.
Some analysts are of the view that this is not the end. CLSA while talking about Indian economy said that things will get worse before they get better.
> Rupee in a free fall
The domestic currency fell close to 97 paise in today's session to hit a low of 72.37 against the US dollar, its lowest level in 2019. Weak GDP print, US-China trade war, and a strengthening US dollar against a basket of curries were behind the fall in rupee.
> Global markets subdued
With US markets shut on Monday, global markets took their cue from weak PMI survey data in Europe and China which raised concerns the global economy was struggling on many fronts. An index of global stocks slipped 0.2 per cent on Tuesday, heading towards a two-month low hit in early August. An index of Asian stocks was down 0.7 per cent.
Expert Take
Market slid as a deceleration in economic growth due to fall in consumption and subdued manufacturing activity diminished the scope for a turnaround in the near-term. The consolidation of PSU banks is a step in the right direction however, they may take more time before earning benefits from synergy. Additionally, weak monthly auto sales and outflow from foreign investors added volatility to the rupee -- Vinod Nair, Head of Research, Geojit Financial Services
Fears of an economic slowdown sparked fears of further outflows by foreign institutional investors after GDP growth slumped to 5 per cent, its lowest in six-years. Foreign investors pulled out a net amount of Rs 5,920 crore from the capital markets in August.
BSE Sensex tanked 770 points or 2.06 per cent to 36,563 while its NSE counterpart Nifty ended at 10,798, down 225 points or 2.04 per cent. Rs 3,00,000 crore of investor wealth was wiped out in today's mayhem.
Only two of 30 Sensex constituents ended in the green, namely Tech Mahindra and HCL Tech. ICICI Bank was the worst-performing stock, sliding as much as 4.45 per cent.
RIL, HDFC duo and ICICI Bank were among the top index drags.
Auto stocks witnessed bear hammering following subdued August sales numbers. The BSE Auto index ended 1.64 per cent down. BSE Bankex dropped 2.43 per cent. Barring IT, most sectors dropped close to 2 per cent.
BSE Midcap and BSE Smallcap indices shed 1.64 per cent and 1.32 per cent, respectively and fared better than Sensex.
The global environment too was subdued as global stocks slipped toward a two-month low, as US-China trade tensions drove investors to the relative shelter of gold, the Japanese yen and government debt.
The rupee witnessed heavy selling pressure amid trade war fears and strengthening US dollar.
Here are the top factors that dragged D-Street lower:
> Poor macroeconomic data
Back-to-back weak macroeconomic data hounded investors on D-Street after markets resumed trading on Tuesday. Besides the below than expected GDP numbers, official data on Monday showed that the growth of eight core industries has dropped to 2.1 per cent in July, mainly due to a contraction in coal, crude oil and natural gas production.
A private forecaster’s PMI data showed the country’s manufacturing sector activity declined to its 15-month low in August. The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) declined to 51.4 in August, its lowest mark since May 2018, from 52.5 in July.
Some analysts are of the view that this is not the end. CLSA while talking about Indian economy said that things will get worse before they get better.
> Rupee in a free fall
The domestic currency fell close to 97 paise in today's session to hit a low of 72.37 against the US dollar, its lowest level in 2019. Weak GDP print, US-China trade war, and a strengthening US dollar against a basket of curries were behind the fall in rupee.
> Global markets subdued
With US markets shut on Monday, global markets took their cue from weak PMI survey data in Europe and China which raised concerns the global economy was struggling on many fronts. An index of global stocks slipped 0.2 per cent on Tuesday, heading towards a two-month low hit in early August. An index of Asian stocks was down 0.7 per cent.
Expert Take
Market slid as a deceleration in economic growth due to fall in consumption and subdued manufacturing activity diminished the scope for a turnaround in the near-term. The consolidation of PSU banks is a step in the right direction however, they may take more time before earning benefits from synergy. Additionally, weak monthly auto sales and outflow from foreign investors added volatility to the rupee -- Vinod Nair, Head of Research, Geojit Financial Services