Sensex slumps 626 points amid weak global cues

Bank shares were among the top losers amid weak macro-economic data

Benchmark share indices dropped over 2%, amid weak global cues, to end near their one-year lows with bank shares leading the decline on the back of weak GDP, core sector and factory growth.

The Sensex provisionally ended down 626 points at 26,657 and the 50-share Nifty ended down 191 points at 7,780.

HDFC, HDFC Bank, ICICI Bank, Axis Bank and SBI were the top Sensex losers along with index heavyweights Reliance Industries and ITC.
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(Updated at 2:30PM)
Markets extended losses in late noon trades on Friday, amid weak global cues, with bank shares leading the decline on weak economic data.

At 2:30PM , the 30-share Sensex was down 695 points at 25,588 and the 50-share Nifty was down 221 points at 7,750.

HDFC, HDFC Bank, ICICI Bank, SBI and Axis Bank were among the top Sensex losers down 2-3% each along with index heavyweights Reliance Ind and ITC.
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(Updated at 1:30PM)
Markets continue to reel under pressure with Nifty trading below the 7,900 mark owing to weakness across the bourses on lower-than-expected GDP numbers along with the India’s manufacturing activity which grew at a slower pace in August. 
 

Losses in the global equities on gloomy manufacturing data from China and prospects of an interest rate hike by the Fed further unnerved the investors.

At 1: 30 PM, the 30-share Sensex was down 437 points at 25,846 and the 50-share Nifty was down 139 points at 7,833. In the broader market, the BSE Mid-cap was down 1.3% and Small-cap index eased 1.2%.

Market breadth continued to remain weak with 1,869 losers and 552 gainers on the BSE.

KEY ECONOMIC DATA

In key economic data released in the last two days, India’s gross domestic product (GDP) growth at 7% in the April-June quarter came in lower than the 7.5% growth recorded in the preceding quarter, but remained higher than the 6.7% growth logged in the corresponding quarter last year.

On the other hand, the Nikkei Manufacturing PMI for India stood at 52.3 compared to the six-month high at 52.7 in July on the back of  slower than expected pick up in new orders and slower than expected pick up in output, data showed on Tuesday.

“PMI reading for the month of August dropped to 52.3 below the six month high of 52.7 seen in July. Importantly, the new orders index, new export orders index and the overall output index registered increases albeit at a slower pace than the previous month," said Rishi Shah, an economist with Deloitte.

"Within the three monitored market groups in output index, the consumer goods sector rose more than the capital and intermediate goods possibly showing that consumption demand could pick up in the coming months as benefits from lower inflation materialise. The latest print also shows that there was transmission of the decrease in input prices faced by the manufacturers to the output prices aiding the case for some more easing of the monetary policy,” shah adds.

The numbers came in a day after China’s manufacturing sector showed contraction at its fastest pace in three years. The official Purchasing Managers’ Index (PMI) fell to 49.7 in August from the previous month’s reading of 50, the first time since February, according to the data released on Monday.

RUPEE

The rupee recovered by 24 paise to 66.24 against the US dollar on increased selling of the American currency by exporters.

STOCK TRENDS

On the sectoral front, BSE Bankex, Capital Goods, Metal, Realty, Auto and Consumer Durables indices are trading lower between 1-3%. However, BSE IT index is trading higher b y 1%.

Shares of realty companies are trading lower after Moody’s said property developers will continue to face challenges due to weak cash flows, flat sales, stagnant prices. Ashiana Housing, Unitech, Indiabulls Real Estate, Oberoi Realty, DLF, Sobha Developers and Housing Development Infrastructure are down between 1-5%.

Shares of pharma major Sun Pharma are trading higher by 1% in a subdued market following the successful completion of the acquisition of GSK's opiates manufacturing facilities in Australia.

Shares of companies in the banking and capital goods sectors are trading lower at the bourses after data showed that India’s gross domestic product (GDP) slowed in the quarter ended June (Q1) this year.

Punjab National Bank, Yes Bank, Canara Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank and Indusind Bank from banking, Larsen & Toubro, Bharat Electronics and Alstom T&D from the capital goods sector are down 2% - 3%. HDFC Bank cut on Monday its base or minimum lending rate by 35 basis points to 9.35%, effective Tuesday.

Axis Bank cut its deposit rates by up to 0.50 per cent across maturities. A cut in deposit rate is generally considered a precursor for reduction in lending rates. 

Oil marketing companies are trading lower after fuel retailers cut petrol and diesel prices by Rs.2 and Rs.0.50 per litre, respectively. Bharat Petroleum Corp falls 1.1%, Hindustan Petroleum Corp. Ltd slips 1.5%.

Maruti sold a total of 1,17,864 vehicles in August, a growth of 6.4%. This included 1,06,781 units in the domestic market and 11,803 units were sold in the exports category. However, the stock is trading 1% lower.

Mahindra & Mahindra declined 2% after the company reported weak tractor and auto sales in July 2015.

The government has permitted Reliance Industries to sell up to 1.2 lakh tonnes of LPG produced at its plants to private cooking gas marketers. The stock is down 1.5%.

Shares of IT companies are trading higher as investors resort to buying in the defensive pockets in a falling market. TCS and Infosys are trading higher by 1.4%.