Sensex sheds 538 points amid global market sell-off
Sensex and Nifty slipped to their lowest levels since last week of October and have fallen in 9 of the last 12 sessions
Mumbai: The benchmark equity index S&P BSE Sensex tumbled more than 500 points on Tuesday after the rupee slumped to a 13-month low against the dollar, and joined the sell-off in world equities, as crude oil prices slipped below $60 a barrel for the first time since 2009.
The rupee fell 0.93% to trade at 63.54 against the dollar, a level last seen on 13 November 2013.
Sliding oil prices and a downbeat China factory survey weighed on Asian shares on Tuesday, while the Russian rouble jumped against the dollar after Russia sharply increased its benchmark interest rate in a bid to halt a collapse in its currency. HSBC flash Purchasing Manager’s Index (PMI) for China dropped to a seven-month low renewing concerns about economic growth.
“Major part of the problem is one of the currency is depreciating, which is hurting the market, as foreign investors’ gains get reduced to that extent,” said Deven Choksey, managing director and chief executive of K.R. Choksey Shares and Securities Pvt. Ltd.
“Another thing is that they have suffered mark to market losses in oil, which is leading to sell-off in other asset classes,” added Choksey.
“Even as fundamentals of Indian companies are fine, this month is going to be a washout for markets,” he said.
BSE’s 30-share Sensex dropped as much as 583.33 points, or 2.14%, to an intra-day low of 26,736.23 points. The Sensex closed down 1.97%, or 538.12 points to 26,781.44, while the National Stock Exchange’s broader barometer 50-share CNX Nifty dropped 1.85%, or 152 points, to end at 8,067.60. Intra-day, both the indices fell to their lowest levels since the last week of October and have fallen in nine of the last 12 sessions.
India’s trade deficit widened to an 18-month high at $16.86 billion in November as merchandise imports rose at a much faster pace than merchandise exports, driven mainly by skyrocketing gold imports. During the month, exports rose 7.27% to $25.96 billion, while imports increased 26.8% to $42.82 billion. Gold imports during November jumped more than six-fold to $5.6 billion.
The metal and realty indices were the biggest losers, down 4.17% and 3.8%, respectively.
Shares of Dr. Reddy’s Laboratories Ltd shed 6.32% to Rs.3,142.05.
Weak China data also weighed on metals and mining stocks. Sesa Sterlite Ltd dropped 7.77% to Rs.194.05. Bhushan Steel Ltd fell 4.65% to Rs.89.20, NMDC Ltd 2.22% to Rs.134.45, Steel Authority of India Ltd (SAIL) 1.02% to Rs.77.25, Tata Steel Ltd 2.82% to Rs.389.40 and Jindal Steel and Power Ltd 4.14% to Rs.132.
SpiceJet Ltd gained 2.58% to Rs.13.9. The government will decide on the future of SpiceJet after the budget airline, which cancelled flights and delayed paying staff this month, sought state support amid concerns it may wind down operations.
Jaypee Group companies were trading lower after a CNBC news report said that the company delayed repayment of fixed deposits to investors. Jaiprakash Associates Ltd fell 6.35% to Rs.23.60, Jaiprakash Power Ventures Ltd declined 3.73% to Rs.11.6, while Jaypee Infratech Ltd was down 4.78% to Rs.19.9.
On Tuesday, the Sensex gainers included Tata Consultancy Services Ltd (TCS), which rose 3.40% to Rs.2,443.15, Infosys Ltd, which climbed 0.69% to Rs.1,937.65 after the rupee weakened past the 63 per dollar level, and Bharti Airtel Ltd that edged up 0.01% to Rs.350.10.
The Russian central bank raised its key interest rate to 17% from 10.5% to halt a collapse in its currency, the biggest increase since the nation’s 1998 default, at an unscheduled meeting after the rouble fell to an all-time low, Bloomberg reported.
The rouble jumped after the interest rate hike, while the Indonesian rupiah tumbled, Bloomberg reported.
The US Federal Reserve will start its two-day monetary policy review on Tuesday which will decide whether to make a critical change to their policy statement that would widen the door for interest rate hikes next year, Reuters reported.
Since the beginning of this year, the Sensex has gained 26.43%, while foreign institutional investors have bought $17.09 billion from local equity markets.
Asian stocks fell, with the regional index at a two-month low, as oil’s slump and weaker-than-estimated Chinese manufacturing stoked concern that the global economy may falter.
Japan’s Nikkei Stock Average was down 2%, Hong Kong’s Hang Seng fell 1.4%, while China’s Shanghai Composite rose 1.1%.
Overnight US stocks ended lower in a volatile session on Monday as oil prices extended their sell-off, adding to worries about weak global demand. The Nasdaq Composite was down 1.04%, S&P 500 fell 0.63%, and Dow Jones Industrial Average dropped 0.58%.
Editor's Picks »
- Reliance Jio seen overtaking Vodafone Idea, Airtel to become India’s largest telecom firm by 2018-end
- ArcelorMittal’s Essar Steel acquisition: Who wins, who loses
- UltraTech’s dismal Q2 results darken outlook on cement sector
- NBFC liquidity crisis set to worsen real estate sector woes
- RBI pause on interest rate hike may last only till December