Markets suffer sharp plunge; Sensex slips below 28000

Markets after moving in a tight range, have suddenly succumbed to selling pressure, though the fall has halted but the benchmarks slipped below their psychological levels of 8500 (Nifty) and 28000 (Sensex). There was global jitters weighing down the markets, while some cautiousness was also due to a latest report of Moody's which stated that India’s sovereign credit profile is more exposed to the negative effects of a drought than most other Baa rated sovereigns because of relatively high share of agriculture in overall employment, weak rural infrastructure and irrigation, inefficient food distribution, large proportion of Indian household spending that goes towards food, and share of food subsidy costs in the government's fiscal deficits. Though, it also pointed that rainfall has performed a little better than initial assumption. Iron and tyre stocks were under pressure after the yuan devaluation, the People’s Bank of China (PBoC), the country’s central bank cut the yuan’s reference rate by a massive 1.9%-the most on record. Iron imports are likely to decline, while dumping of cheap Chinese tyres look poised to increase with yuan devaluation. MRF, Ceat and Apollo Tyre were down by around 2%, while JK Tyre lost over 3%. On the other hand, the sharp fall in rupee has turned the IT stocks jubilant and they are moving higher led by Infosys, TCS and Tech Mahindra.

The BSE Sensex is currently trading at 27996.82, down by 104.90 points or 0.37% after trading in a range of 27940.48 and 28205.12. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.31%, while Small cap index lost 0.60%.

The two gaining sectoral indices on the BSE were IT up by 1.34%, TECK up by 1.01%, while Metal down by 1.85%, Capital Goods down by 1.21%, Oil & Gas down by 0.91%, INFRA down by 0.79%, Power down by 0.78% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.18%, SBI up by 1.18%, TCS up by 1.02%, Cipla up by 0.89% and Maruti Suzuki up by 0.27%. On the flip side, Tata Steel down by 3.01%, Hindalco down by 2.87%, Tata Motors down by 1.80%, Hindustan Unilever down by 1.72% and Coal India down by 1.63% were the top losers.

Meanwhile, the Organisation for Economic Cooperation and Development (OECD), the Paris-based think tank of developed economies, in its latest monthly leading indicator, a measure designed to flag turning points in the international economy has said that it expects India’s growth to be stable, even as it forecast a slowing of the Chinese economy.

In its latest prediction OECD said that stable growth momentum is expected in Germany, Japan and India. The CLI (composite leading indicators) for Russia also points to stable growth momentum albeit below long term trend. However, it said that in Brazil and China, CLIs point more strongly than last month to a loss in growth moment. China's indicator continued its steady decline to 97.41 in June from 97.51 in May, while Brazil slipped to 98.84 from 98.96. On the other hand India’s improved to 99.65 from 99.57, showing a month-on-month growth of 0.09% and year-on-year growth of 0.88%.

Regarding other countries, OECD stated that indicators remained at 100.7 in the euro zone for the fourth consecutive month in June but continued to ease to 99.4 in the U.S. from May's 99.5, having fallen below 100 in February. Britain's reading slipped to 99.8 in June, having dipped below 100 to 99.9 in May. The index rose month-on-month to 100.8 from 100.7 in France and was stable at 100.9 in Italy.

The report pointed that economic growth is showing further signs of firming in France, Italy and the euro zone overall, while growth looks to be easing to around long-term trends in the United States and UK.

The CNX Nifty is currently trading at 8494.90, down by 30.70 points or 0.36% after trading in a range of 8471.40 and 8556.25. There were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were Infosys up by 1.81%, Tech Mahindra up by 1.59%, SBI up by 1.34%, TCS up by 1.04% and Cipla up by 0.94%. On the flip side, Tata Steel down by 3.08%, Hindalco down by 2.78%, BPCL down by 2.71%, Ambuja Cement down by 1.94% and NMDC down by 1.87% were the top losers.

The yuan devaluation has impacted the whole regional indices, Jakarta Composite was down by 102 points or 2.15% to 4,646.95, Nikkei 225 lost 75.48 points or 0.36% to 20,733.21, Taiwan Weighted declined by 72.7 points or 0.86% to 8,394.14, Straits Times was lower by 21.54 points or 0.67% to 3,175.12, KOSPI Index lost 16.52 points or 0.82% to 1,986.65 and FTSE Bursa Malaysia KLCI was down by 13.83 points or 0.84% to 1,640.54

On the other hand, Shanghai Composite gained12.06 points or 0.31% to 3,940.47 and Hang Seng surged by 193.9 points or 0.79% to 24,715.02.