Indian stock market indices Sensex and Nifty fell sharply today while the rupee also suffered a big loss against the US dollar. At the day’s low, the Sensex fell over 850 points to 36,466 after data released last week showed GDP grew at its weakest pace in over six years as consumption demand weakened. A separate private sector survey indicated that expansion in the country's manufacturing sector hit its slowest in 15 months in August. The Sensex finished 2% lower at 36,562 - its biggest one-day fall since October last year - while Nifty settled 2% lower at 10,797.
Here are 10 updates from today’s stock markets:
1) The decline was led by banking stocks with the Nifty bank index falling 2.2%. Among financials, PNB fell 9%, ICICI Bank 4%, HDFC 4%, RBL 4% and Axis Bank 3%.
2) The PSU banking index on the NSE fell 5% after the government announced a series of mergers involving 10 such banks to boost the struggling sector and revive economic growth. Indian Bank, Canara Bank, Union Bank and Oriental Bank slumped between 10% and 12%.
"Market slid as 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 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 rupee," said Vinod Nair, head of research at Geojit Financial Services.
3) Among auto stocks, Tata Motors, Bosch, Motherson Sumi and Eicher Motors fell between 3% and 4% after top automakers reported a slump in August sales over the weekend. Another market heavyweight Reliance Industries fell over 3%.
4) Many analysts have revised lower their growth estimates for the year after GDP growth decelerated sharply to 5% on the back of weakness in private consumption and investment. “With a deeper-than-estimated trough and lack of significant impetus to the growth drivers in the near term, we further revise down our FY20 GDP growth estimate by 50 bps to 5.8%," Kotak Securities said in a note.
The Nifty is down about 10% from its June highs. And market analysts remain cautious. Ajit Mishra, vice president for research at Religare Broking, said: "In the near term, weak domestic sentiments and uncertain global cues may continue to have negative impact on the Indian markets. Hence, we continue to remain cautious until there are meaningful signs of revival in the economy. Further, falling rupee (vs US dollar) is a key concern which could negatively impact the sentiments. On global front, trade tension between US-China is likely to induce volatility across markets."
5) The broader markets were also weak today with the BSE midcap and smallcap indices falling 1.6% and 1.3% respectively.
6) Shares of ONGC fell 3% today after a fire broke out in a storm water drainage network at the company's oil and gas processing plant in Uran, Navi Mumbai.
7) ONGC said there has been no impact on oil processing and gas from Bombay High has been diverted to its Hazira plant. Reliance Securities does not see a major impact of the fire incident at the Uran plant on ONGC gas sales in the second quarter of FY19. "A fall in oil prices can impact earnings in FY20 while the target for disinvestment receipts has increased to ₹1.05 lakh crore for FY20 from ₹90,000 crore in the interim Budget. This is a key overhang on the stock as the government holds a 64.25% stake in ONGC," said Reliance Securities, which maintains a positive view on the stock.
8) The rupee slumped 100 paise to 72.40 against the US dollar today, as compared to the previous close of 71.40.
9) Indian markets continue to be hurt by selling pressure from foreign investors, which sold a net $2.3 billion worth of Indian stocks last month.
10) Asian markets ended mixed today while European equity markets struggled as investors waited to see if Chinese and American officials can schedule a planned meeting this month to continue trade talks.