Markets Crash on Global Sell-off; Sensex At 3-mth Low, Nifty Below 8,600-mark

Mumbai: After two days of holidays, Indian stocks tumbled like nine pins on Thursday, with the market benchmark Sensex plunging over 439 points to close at a three-month low of 27,643.11 after a slew of global factors such as weak Chinese export data and Fed rate hike talks unnerved investors. Besides, a caution ahead of retail inflation numbers - to be released after market hours. Key quarterly results also influenced trading sentiment on domestic markets. Shares of finance, telecom, banking, realty, utilities and industrials fell sharply due to heavy profit-booking.

The BSE Sensex opened lower and stayed in the negative zone to hit a low of 27,563.84 points before settling 439.23 points, or 1.56 per cent down at 27,643.11, its lowest closing since July 11. Out of 30-Sensex constituents 24 closed with losses.

Vinod Nair, Head of Research, Geojit BNP Paribas Financial

Market was in an intense selling mode after two trading holidays tracking weak global markets which were impacted by poor Chinese trade data, fear of hike in US interest rate and Brexit worries. Domestically investors are also cautious due to the unimpressive August IIP data and awaiting key Q2 results. Trading, after a two-day holiday, resumed on a subdued note largely in tandem with a weak trend at rest of Asian markets after a below-forecast reading on Chinese data fanned fresh concerns about its economy and Fed Reserve September’s meeting minutes boosted the case for higher US interest rates this year.

The gauge had gained 21.20 points in the previous session on Monday. Stock Exchanges remained closed on Tuesday and Wednesday for Dussehra and Moharum, respectively. On similar line, the National Stock Exchange (NSE) index Nifty broke below the 8,600-mark to touch the session's low of 8,541.35 and finally settled 135.45 points, or 1.56 per cent, down at 8,573.35.

Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services Ltd, said: "Market was in an intense selling mode after two trading holidays tracking weak global markets which were impacted by poor Chinese trade data, fear of hike in US interest rate and Brexit worries. Domestically investors are also cautious due to the unimpressive August IIP data and awaiting key Q2 results. Trading, after a two-day holiday, resumed on a subdued note largely in tandem with a weak trend at rest of Asian markets after a below-forecast reading on Chinese data fanned fresh concerns about its economy and Fed Reserve September's meeting minutes boosted the case for higher US interest rates this year."

Market participants' outlook turned bearish on fears that an expected US rate hike could trigger outflows by foreign funds from emerging markets, they added.

The minutes of the September 20-21 meeting, at which the US central bank held rates steady, showed a greater probability of a rate hike in December. Several voting Federal Reserve policymakers judged a rate hike would be warranted relatively soon if the US economy continued to strengthen. Adding to the global woes, China's September exports fell 10 per cent from a year earlier, far worse than expected, while imports unexpectedly shrank 1.9 per cent after picking up in August, suggesting signs of stability in the world's second-largest economy may be short-lived.

Cautious investors also focused on the September-quarter earnings season with Tata Consultancy Services, country's largest software exporter, reporting after market hours today. Shares of TCS retreated 2.17 per cent, to Rs 2,328.50 but Infosys was up 2.19 per cent at Rs 1,052.05. The company is scheduled to announce its quarterly earnings tomorrow.

In line with equities, the rupee also plummeted by 42 paise, its biggest fall in two weeks, to 66.95 against the dollar (intra-day) at the forex market, fuelling selling pressure in domestic stocks. Adding to the weakened sentiment, IIP data, released this Monday, showed industrial output in August remained in the negative zone, the second month in a row, contracting by 0.7 per cent due to a slump in manufacturing, mining and capital goods segments.

The list of losers includes Adani Ports, HDFC Ltd, ICICI Bank, RIL, Tata Motors, Bharti Airtel, SBI, Axis Bank, Lupin, Power Grid, Sun Pharma, Bajaj Auto, Hind Unilever, HDFC Bank and NTPC. Foreign portfolio investors (FPIs) sold shares worth a net Rs 547.26 crore on Monday, showed provisional data.

Among sectoral indices, banking suffered the most by falling 2.19 per cent followed by realty 2.17 per cent, metal 1.91 per cent, consumer durables 1.88 per cent, power 1.85 per cent, healthcare 1.40 per cent and auto 1.31 per cent. While IT index rose 0.18 per cent. The broader markets too remained under pressure, with the BSE mid-cap index slumping 1.50 per cent and the small-cap index lost 1.41 per cent. Globally, Asian stocks tumbled for the day with benchmark indices in Hong Kong, Japan and Singapore falling by up to 1.61 per cent. European markets were also in negative zone with key indices in France, Germany and the UK down by up to 1.14 per cent their in early trade.

RBI Sets Reference Rate At 66.8473/USD

The Reserve Bank of India (RBI) on Thursday fixed the reference rate of the rupee at 66.8473 against the US dollar and 73.6657 for the euro. The corresponding rates were 66.5856 and 74.4027 as on October 10, 2016. According to an RBI statement, the exchange rates for the pound and the yen against the rupee were 81.3131 and 64.44 per 100 yens, respectively, based on reference rates for the dollar and cross-currency quotes at noon. The SDR-rupee figure will be based on this rate, the statement added.

Rupee was trading lower by 29 paise at 66.82 against the American currency at the Interbank Foreign Exchange market as the dollar strengthened overseas amid a lower opening of the domestic equity market. Forex dealers said increased demand for the US currency from importers and the greenback's gains against other currencies overseas after minutes of the Federal Reserves last meeting pointed at an interest rate hike this year, put pressure on the rupee.

Source: PTI