Benchmarks crash like house of card; Sensex breaches 25,700 mark

Final hour of trade proved to be the curse for the markets and bourses settled below their crucial 25,700 (Sensex) and 7,850 (Nifty) bastions with a cut of over two percentage points as investors turned risk averse amid lingering global growth worries. 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 metal, capital goods, power, banking and realty. Earlier, markets rose to a one-month high amid renewed hopes of a rate cut by Reserve Bank of India (RBI). Some support also came with Finance minister Arun Jaitley’s statement that continuing reforms will push India’s economic growth higher than last year's 7.3 percent despite adverse global winds.

However, markets witnessed sudden fall in last leg of trade amid profit taking at higher levels as traders turned cautious ahead of the expiry of September derivative contracts on Thursday. Sentiments also weighed down with Asian Development Bank’s statement that growth in developing Asia will likely be slower than previously thought as a slowdown in China's economy hurts demand; it has also urged policymakers in the region to strengthen financial-system buffers against external shocks. Marketmen also failed to draw any sense of relief with India Meteorological Department’s (IMD) report that the enhanced activity of the southwest monsoon across several parts of the country for the next three-four days is giving a breather to regions reeling under severe water deficiency.

Selling got intensified after European markets made an awful start with CAC, DAX and FTSE, led lower by miners as copper prices slid on worries over Chinese demand, while the dollar hit its highest in almost two weeks after Federal Reserve officials signalled US interest rates could still rise this year. However, Asian markets following the US trends ended mostly in the green, boosted by the Chinese market which rising for a third day surged by about a percent, after Chinese President Xi Jinping said the nation’s reforms won’t be derailed by signs of economic weakness, and that the government is stepping up efforts to transform its model for growth.

Back home, depreciation in Indian too dampened the sentiments. The rupee was at 65.92 per dollar at the time of equity markets closing as compared to 65.74 per dollar level on Monday. Selling in metal counter mainly played the spoil sport with S&P BSE Metal space losing over four percent on demand growth concern amid faltering economies around the globe. Stocks related to oil and gas space remained under pressure, though according to Oil Ministry data, natural gas production in August rose 3.7 per cent, the first increase in almost five years. Crude oil production also grew 5.6 per cent last month, the highest monthly growth since June 2011. IT stocks that witnessed strong buying helping the up-move of market in early deals, too lost the direction and ended in red.

The NSE’s 50-share broadly followed index Nifty declined by over one hundred and sixty points to end below the psychological 7,850 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex tumbled by over five hundred and forty points to end below its crucial 25,700 mark. Broader markets too witnessed bloodbath and ended with a cut of around one and a half percent. The market breadth remained in favor of decliners, as there were 970 shares on the gaining side against 1,719 shares on the losing side while 107 shares remain unchanged.

Finally, the BSE Sensex plunged by 541.14 points or 2.07% to 25651.84, while the CNX Nifty declined by 165.10 points or 2.07% to 7812.00.

The BSE Sensex touched a high and a low 26339.10 and 25571.34, respectively. The BSE Mid cap index was down by 1.57%, while Small cap index was down by 1.21%.

The top losing sectoral indices on the BSE were Metal down by 4.24%, Capital Goods down by 3.10%, Power down by 3.09%, Bankex down by 3.04% and Realty down by 2.54%, while there were no gainers on the sectoral index.

The top gainers on the Sensex were Wipro up by 0.40%, Mahindra & Mahindra up by 0.20%, Sun Pharma up by 0.13% and Infosys up by 0.08%. On the flip side, Vedanta down by 6.29%, Hindalco down by 6.22%, Coal India down by 5.40%, Tata Motors down by 4.81% and NTPC down by 4.58% were the top losers.

Meanwhile, the Asian Development Bank (ADB) in its 2015 outlook update has said that growth in developing Asia will likely be slower than previously thought as a slowdown in China's economy hurts demand. The bank has said that developing Asia is now expected to grow 5.8 percent and 6.0 percent this year and in 2016, down from the ADB's July forecast of 6.1 percent and 6.2 percent. The report, which covers 45 economies, cut forecasts for some of the region's biggest countries including China, India, South Korea and Indonesia. The ADB said that the capital outflows could accelerate ahead of the Fed rate hike and urged policymakers to strengthen financial systems in the region to mitigate shocks.

As per the report India's growth is seen weaker at 7.4 percent and 7.8 percent for this year and next compared with its July forecasts of 7.8 percent and 8.2 percent, citing slower progress on major reforms, which has hindered investment, and sagging exports. The Chinese economy, which grew a revised 7.3 per cent last year, is now tipped to slow to 6.8 per cent growth in 2015 and 6.7 per cent in 2016. That's down from 7.2 per cent and 7.0 per cent forecast previously.The ADB slashed its growth forecast for South Asia to 6.9 percent this year and 7.3 percent next year compared with the 7.3 percent and 7.6 percent estimates made in July. Southeast Asia's growth will be at 4.4 percent this year, same as last year and down from its July forecast of 4.6 percent, before accelerating to 4.9 percent next year.

The report said that despite robust consumption demand, economic activity fell short of expectations in the first eight months of the year as investments and exports underperformed' in China The Manila-based lender has however said that it expects the pressure to ease once the recovery in the world's advanced economies picks up, strengthening global demand. The CNX Nifty touched a high and low 8021.60 and 7787.75 respectively.

The top gainer on Nifty was Wipro up by 0.30%. On the flip side, Hindalco down by 6.66%, Vedanta down by 6.25%, Coal India down by 5.60%, Tata Motors down by 5.03% and Yes Bank down by 4.93% were the top losers.

European Markets were trading in the red; France’s CAC was down by 3.29%, UK's FTSE was down by 2.34% and Germany’s DAX was down by 3.06%. 

The Asian markets closed mostly in green on Tuesday, stabilizing from sharp declines in the previous session, as Wall Street ended higher overnight. Nikkei stock exchange was closed on account of National holiday. The Asian Development Bank stated that weaker growth in China this year is expected to cause a slowdown in the rest of Asia. The report comes as markets have been hit by extreme volatility driven by fears over the Chinese economy -- and its leaders’ management of it -- after last month’s surprise devaluation of its yuan currency. In an update to its flagship Asian Development Outlook released in March, the bank stated that growth in the region would hit 5.8% this year and 6.0% in 2016. However, it tipped China -- the main driver of global economic growth -- to expand 6.8% this year, instead of the 7.2% previously estimated, following a stream of weak indicators including on trade, inflation, investment and consumer spending. Bank Indonesia Governor Agus Martowardojo stated that the country’s foreign exchange reserves have fallen to $103 billion. At the end of August, Indonesia’s foreign reserves totaled $105.35 billion, down from $107.55 billion at the end of July. The central bank is due to announce September’s final figure on October 7.