Benchmark equity index BSE Sensex slumped more than 1,200 points in early morning trade on Tuesday, its biggest fall since August 2015, tracking a huge selloff in world equities after Wall Street logged record decline overnight.
The index recovered some losses in the afternoon session, as stocks like Tata Steel, Bharti Airtel, L&T and ICICI Bank began to trade in the green, At 2:17 pm, BSE Sensex was at 34,237.74, down 1.49% or 519.42 points, while the broader NSE Nifty 50 reclaimed 10,500, trading at 10,511.45, 1.45% lower.
Among the sectoral indices, BSE Consumer Durables index was the top loser which was down 2.45%, followed by BSE IT index, down 2.22%. BSE Bankex recovered losses to trade 0.28%lower in the afternoon.
Tata Motors Ltd cracked nearly 10% intraday after it reported lower than expected earnings due to weak performance by JLR. At 2:28 pm, Tata Motors was trading lower by 4.46%.
Banking, consumer durables, and IT stocks also contributed to the losses, with TCS lower by 3.06%, Infosys 2.19%, Hindustan Unilver, 2.09%, Asian Paints, 2.06%, and Kotak Bank 2.16%
On Monday, the Dow Jones Industrial Average fell nearly 1,600 points during the session, its biggest intraday decline in history, on fears quickening inflation may lead to higher rates by the US Federal Reserve.
Elsewhere in Asia, Japan’s Nikkei was down 5.4%, while China’s Shanghai Composite Index shed 4.7%.
In intraday trade, Sensex slumped nearly 1,274.35 points to 33,482.81 points, while Nifty declined 371.40 points to 10,295.15. Both Nifty and Sensex fell nearly 3.5%, their biggest slump since August 2015.
“Indian markets are mirroring the freefall in world equities. The fear of inflation firming up, and hardening bond yields led to increase in US VIX and send the US market spiralling down, with momentum strategies adding to the domino effect ,” said Ritesh Jain, chief investment officer at BNP Paribas Mutual Fund.
“We have turned completely from greed to fear and, hopefully, the fear should settle down without any systemic damage. It’s a wait and watch situation until then,” added Jain.
A total of over Rs 12.50 trillion worth of investments got wiped off in the last six trading sessions, its longest losing streak in four months, tracking global selloff amid strong US jobs data.
According to BSE data, market capitalisation of all listed BSE companies stood at Rs 142 trillion on Tuesday, which was lower than Rs 155 trillion as on 30 January.
During the six-day losing streak, benchmark Sensex index declined nearly 7% or 2,529 points, while the Nifty index slumped over 6.3% or 765 points.
US stocks plunged in highly volatile trading.
Indian markets are already under pressure after the government presented the budget on 1 February that focused on populist measures ahead of general elections in 2019 and imposed a long-term capital gains tax on equities.
Traders will also keep an eye on the Reserve Bank of India’s (RBI) interest rate decision on 7 February. Analysts expect the RBI to keep interest rates on hold on expectations that inflation may accelerate further due to higher crude oil prices and a proposed hike in minimum support prices (MSP) for farmers.
Of the 15 economists surveyed by Mint, 14 expect the central bank to keep repo rate-the rate at which the central bank infuses liquidity in the banking system-unchanged at 6%. Only one expects a rate hike of 25 basis points.
Analysts said breaching its fiscal deficit target for fiscal year 2017 and revising upward its deficit target for the next fiscal could prompt RBI to change its policy stance in the near future.
On 1 February the government informed that it breached its fiscal deficit target to 3.5% from the earlier target of 3.2% and revised its deficit target to 3.3% from 3% earlier for FY18. (By HT)
