Benchmarks witness bloodbath on Monday; Sensex breaches 24,900 mark

Indian barometer gauges witnessed bloodbath with both the major indices losing over one and half a percentage points and ending below their crucial 7,600 (Nifty) and 24,900 (Sensex) levels on lingering worries over China slowdown. 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 healthcare, metal and banking. After trading in tight band for most part of the day’s trade, domestic gauges crashed like house of card in the last leg of trade as investors offloaded their positions on account of mixed US jobs data which failed to give clarification regarding the Fed rate hike.

Sentiments remained dampened after Indian Meteorological Department (IMD) said that overall monsoon deficit has widened to 13% of long-period average even as the southwest monsoon began its withdrawal. Investors failed to draw any sense of relief from the IMF’s statement that India is among the few bright spots in the global economy, at the meeting of G20 Finance Minister and Central Bank Governors where they also discussed monetary policy uncertainties. Traders also failed to draw any solace with government stating that it wants an extended Monsoon session so that the Constitutional amendment GST bill can be approved and has also appealed to Congress to support the key reform to accelerate the country's growth.

On the global front, European counters were trading in green in early deals, led by a surge in mining and commodities giant Glencore after it pledged to slash its debt by a third. However, Asian markets ended mostly in red on Monday led by the Shanghai Composite Index which again turned volatile and suffered cut of over 2 percent coming after a long holiday, despite People’s Bank of China Governor Zhou Xiaochuan stating that the rout in Chinese equities is close to ending.

Back home, depreciation in Indian rupee against dollar too dampened the sentiments. The Indian rupee dipped to a fresh 2-year of 66.80 against the US dollar compared to the previous close on dollar demand from banks. Sentiments remained dampened on report foreign portfolio investors (FPIs) sold shares worth a net Rs 1287.12 crore on September 4, 2015. Slump in metal counter too played spoil sport for the Indian equity markets. Shares like Jindal Steel, Vedanta, Hindalco and NMDC edged lower by 3-5% post Chinese revision of annual economic growth rate in 2014 to 7.3% from the previously released figure of 7.4%. The telecom stocks too remained under pressure on reports that Department of Telecom may go slow for auction of spectrum next year if operators do not invest in infrastructure to make optimum use of available airwaves and improve quality of services.

The NSE’s 50-share broadly followed index Nifty tumbled by around a hundred points to end below the psychological 7,600 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over three hundred points to finish below its psychological 24,900 mark. Broader markets too witnessed blood-bath and ended the session with a cut of around two percentage points. The market breadth remained in favor of decliners, as there were 688 shares on the gaining side against 1,988 shares on the losing side while 98 shares remain unchanged.

Finally, the BSE Sensex plunged by 308.09 points or 1.22% to 24893.81, while the CNX Nifty declined by 96.25 points or 1.26% to 7558.80.

The BSE Sensex touched a high and a low 25387.32 and 24851.77, respectively. The BSE Mid cap index was down by 2.31%, while Small cap index was down by 1.76%.

The top losing sectoral indices on the BSE were Healthcare down by 2.57%, Metal down by 2.31%, Bankex down by 2.10%, Power down by 1.92% and Capital Goods down by 1.89%, while there were no gainers on the sectoral index.

The top gainers on the Sensex were HDFC up by 0.64%, Tata Motors up by 0.23%, ONGC up by 0.18% and Maruti Suzuki up by 0.07%. On the flip side, Axis Bank down by 3.90%, Vedanta down by 3.59%, ICICI Bank down by 3.34%, Hindalco down by 3.05% and Lupin down by 2.96% were the top losers.

Meanwhile, finance minister Arun Jaitley, asserting that India is on a “sound footing” as manufacturing and services sectors have begun picking up and the government was focused on strengthening the real economy rather than being swayed by the market volatility, has said that factors like the Chinese devaluation of yuan and the US Fed's likely interest rate hike are 'transient' and it will be only the real economy that will dictate the currency rate fluctuations and markets in India.

Jaitley while speaking on the sidelines of the G20 meeting of Finance Ministers and Central Bank Governors, pitched for global safety nets to address concerns over volatility in currency and stock markets, a demand that came against the backdrop of the economic shocks triggered by the Chinese devaluation of yuan. He also sought well-designed and quickly-triggered safety nets under IMF (International Monetary Fund) by strengthening of liquidity arrangements by multilateral swap arrangements between member countries to tackle negative spillovers arising from domestic action.

The FM also said that Fed hike remains a matter which the US will decide later this month. But, according to me, whatever situation emerges, that would be only a transient phase and therefore our response is that we have to strengthen our own real economy. He said that India needs to ensure that the parameters of its own real economy are strengthened and the government progresses well on that track.

Meanwhile, the G20 which includes the advanced economies such as the USA and Europe as well as the as the BRICS members, called for moving towards market-determined currency rates, in backdrop of China's surprise decision to revalue the yuan as it tried to contain the market turmoil that caused the currency to drop the most in 21 years last month.

The CNX Nifty touched a high and low 7705.05 and 7545.90 respectively.

The top gainers on Nifty were Tech Mahindra up by 1.29%, HDFC up by 0.99%, Yes Bank up by 0.59%, Tata Motors up by 0.34% and ONGC up by 0.45%. On the flip side, NMDC down by 4.43%, Bosch down by 3.97%, Axis Bank down by 3.53%, ICICI Bank down by 3.39% and Vedanta down by 3.38% were the top losers.

European Markets were trading in the green; France’s CAC was up by 0.32%, Germany’s DAX was up by 0.29% and UK's FTSE was up by 0.37%.

The Asian markets closed mostly in red on Monday with China stocks ending lower after a volatile day as investors sold shares in the aftermath of a four-day market holiday. China’s central bank governor notified that China’s currency has stabilized against the dollar after the country’s surprise announcement last month to revalue the yuan amid stock market turmoil. He added that at present, the exchange rate of RMB against dollar tends to be stable, and most of the correction of the stock market has taken place, so the financial market is expected to be more stable. China has revised its annual economic growth rate in 2014 to 7.3% from the previously released figure of 7.4%. Gross domestic product stood at 63.6 trillion yuan last year, down by 32.4 billion yuan from the initial estimate. The bureau has revised down 2014 growth of the services sector by 0.3% points to 7.8%, which helped drag down estimated GDP growth rate. The primary sector - the agriculture sector - grew 4.1% last year, while growth of the secondary sector, which includes manufacturing and construction, rose 7.3%. After the revision, the services sector accounted for 48.1% of GDP last year, down from the previously announced 48.2%. Taiwanese Trade Balance rose to a seasonally adjusted annual rate of 3.96B, from 3.62B in the preceding month.