Sensex sheds 1.1% on China data

The Bombay Stock Exchange (BSE) Sensex shed 1.1 per cent on Thursday in a shaky start to the new quarter as world markets were spooked by data that showed China’s rapid manufacturing growth was cooling.

Together with lingering worries about the debt problems in Europe, concerns resurfaced about the strength of the global economic recovery and their impact on fund flows, especially in emerging markets such as India, traders said.

“Nifty closed at the crucial support of 5,250. If it does not fall below this, the markets may turn around and make an upward move. It is likely that the index will close at higher levels, as quarterly results are not anticipated to be bad. Talks of additional stimulus are resurfacing in the US,” said Kishor Ostwal, managing director of Mumbai-based CNI Research.

Banks were among the top losers on Thursday, as expectations of rising inflation were seen to exert pressure on the Reserve Bank of India to adopt a hawkish stance. Inflation may rise due to the direct fallout of the fuel price hike effected last week.

State Bank of India dropped 1.8 per cent, while ICICI Bank and HDFC Bank shed 2.4 per cent and 0.4 per cent, respectively. Fortis Healthcare rose 1.2 per cent to Rs 154.10 in a choppy trade on Thursday after the company launched a bid valuing Singapore hospital operator, Parkway Holdings, at $3.1 billion, topping a rival offer by Khazanah.

The 30-share BSE index closed down 1.08 per cent, or 191.57 points, at 17,509.33, with 25 of its components declining.Sentiment also weighed down after a survey showed that manufacturing growth cooled in June after a surge in activity during the previous month. Top car maker Maruti Suzuki shed 1.7 per cent after sales growth in June slowed compared to the previous month, partly due to a six-day shutdown of its plants for maintenance. Traders said fresh global economic worries could impact foreign portfolio inflows, which have been a key driver for the country’s stock markets.

The BSE index gained 4.5 per cent in June, posting its best monthly rise since March, as foreign funds invested $2.1 billion during June 1-29. The benchmark had fallen 3.5 per cent in May, when foreigners pulled out $2 billion, as euro zone debt troubles dented risk appetite. The index rose one per cent in April-June, climbing for the sixth straight quarter in its longest run in at least 20 years. Metal producers declined as London base metal prices came off. Non-ferrous metals producer Sterlite Industries and aluminium maker Hindalco fell 3.2 per cent and one per cent, respectively. In the broader market, losers and gainers were almost equal in number in relatively moderate volume of nearly 400 million shares.