Global fears rattle benchmarks: Nifty breaches 7,850 level

Monday’s trading session turned out to be a daunting one for stock markets in India and benchmarks ended below their crucial 7,850 (Nifty) and 25,800 (Sensex) levels, following fears of a slowdown in the Chinese economy on expectations of tapering demand for goods and services worldwide going forward. After a gap-down opening, the domestic bourses never looked in recovery mood and ended the trade near ten months lows with a huge cut of around six percent, making it the biggest crash in about seven years on a global rout and the third biggest-ever for the BSE benchmark index. Selling was both brutal and wide-based as none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include realty, oil and gas and power.

Depreciation in Indian rupee too dampened the sentiments. The rupee slumped to its lowest since September 2013, adding to the panic of the investors, as the depreciation in the rupee hits foreign investors and diminishes their returns. Investors failed to get any sense of relief after Reserve Bank of India Governor Raghuram Rajan’s statement, who said the central bank will not have any “hesitation” in using foreign exchange reserves to reduce currency volatility. Rajan said that relative to other countries India is in a good position with strengthening growth, a low current account deficit and narrowing fiscal deficit, moderating inflation, low short term foreign currency liabilities and very size-able exchange reserves relative to imports and liabilities.

Selling got intensified after European markets made an awful start and were trading sharply lower in early deals, as the selloff in stock markets around the world continued. Asian stocks dived to 3-year lows and ended in red on Monday as a rout in Chinese equities gathered pace, hastening an exodus from riskier assets as fears of a China-led global economic slowdown roiled world markets.

Back home, sentiments remained dampened after foreign portfolio investors (FPIs) sold shares worth a net Rs 2340.60 crore on August, 21, 2015, as per provisional data released by the stock exchanges. Shares of oil and gas companies witnessed selling pressure with some of them hitting 52-week lows after concerns over sluggish economic growth in China led to sell-off in global commodities. Further, Iran’s plans to boost crude oil production in an effort to boost market share also dampened sentiment. Additionally, metal stocks too declined despite FM stating that the nation's steel sector needs to be strengthened and preserved, as consumption of the product will increase with the Indian economy growing. Jaitley said that adverse global cues in the steel sector are only a transient trend, and India has the strength to withstand global challenges.

The NSE’s 50-share broadly followed index Nifty declined by around five hundred points to end below the psychological 7,850 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over one thousand six hundred and twenty points to end below its crucial 25,800 mark. Broader markets too struggled to get any traction during the trade and ended the session with a cut of around eight percentage points. The market breadth remained in favor of decliners, as there were 306 shares on the gaining side against 2,486 shares on the losing side while 52 shares remain unchanged.

Finally, the BSE Sensex plunged by 1624.51 points or 5.94% to 25741.56, while the CNX Nifty dropped by 490.95 points or 5.92% to 7809.00.

The BSE Sensex touched a high and a low 26730.40 and 25624.72, respectively. The BSE Mid cap index was dwon by 7.68%, while Small cap index was down by 8.81%.

The top losing sectoral indices on the BSE were Realty down by 10.93%, Oil & Gas down by 9.20%, Infrastructure down by 8.67%, Power down by 8.12% and PSU down by 7.87%, while they were no gainers on sectoral index.

The top losers on the Sensex were Vedanta down by 15.30%, Tata Steel down by 13.11%, GAIL India down by 12.78%, ONGC down by 11.17% and Bajaj Auto down by 9.09%, while they were no gainers on sensex.

Meanwhile, amid the global chaos over stalling economic growth, Finance Minister Arun Jaitley has reiterated that most of the challenges faced by the Indian economy have been created by external factors, though he expressed confidence in the country's strong fundamentals to withstand such transient global trends and said that “I have no doubt that our ability to withstand the transient global trend, created predominately by external factors is very strong.”

Jaitely emphasizing that macroeconomic indicators like inflation, forex reserve, capital investment in infrastructure and revenue collection are all positive, stated that if an economy exists on its own solid foundation and its own fundamentals are strong, then it is not a very challenging task' to withstand these transient trends.

Finance minister said while the global situation might not be very promising, India could have an opportunity if it gets its fundamentals right. He said that India could surpass the target of eighth per cent GDP growth this financial year if legislative and executive decisions were taken properly.'I do believe it is (8 percent and above growth) achievable... if we take right steps in the right direction. In order to achieve it, it is extremely important that we open ourselves for investments.”

FM also ruled out any impact of monsoon on the economy and said there was only a “slight inadequacy” in rains. He added that we are expecting a better show in agriculture this year compared to last year.

The CNX Nifty touched a high and low 8060.05 and 7769.40 respectively.

The top losers on Nifty were Vedanta down by 14.85%, Gail India down by 14.16%, Tata Steel down by 13.83%, Cairn India down by 13.20% and PNB down by 11.36% were the top losers, while there were no gainers.

European Markets were trading in the red; France’s CAC was down by 2.67%, Germany’s DAX was down by 2.76% and UK's FTSE was down by 0.2.78%.

The Asian markets closed in red on Monday, with China’s Shanghai Composite index posting its biggest one-day percentage loss since 2007, as fears surrounding the health of China's economy multiplied. Japanese Prime Minister Shinzo Abe stated that it was acceptable for the Bank of Japan to miss its self-imposed deadline to meet its inflation target, suggesting that the government was in no mood now to pressure the central bank to expand monetary stimulus. Consumer inflation has ground to a halt mainly due to the effect of slumping oil prices, keeping the BOJ under pressure to do more to meet its pledge - made in April 2013 - to accelerate inflation to 2% in roughly two years. Abe expressed confidence that Japan’s economy remained on a solid recovery path adding that with oil prices continuing to fall, the BOJ missing the two-year deadline could not be helped. Singapore’s core inflation edged higher in July, but growing uncertainty about the outlook for growth and prices was seen likely to keep open the possibility of further monetary easing. The core inflation gauge rose 0.4% in July from a year earlier, higher than the median forecast of a steady 0.2% year-on-year forecast in a survey. Taiwanese Industrial Production fell to a seasonally adjusted annual rate of -2.99%, from -1.35% in the preceding month.