India's benchmark equities indices witnessed carnage on Black Monday with the markets recording their biggest single-day percentage decline since January 2009.
Fearful investors shunned equities, tracking a sharp sell-off in Chinese stocks over concerns that the sluggish growth in that country would lead to a global economic slowdown.
The 30-share Sensex closed 1,625 points or 5.9% lower at 25,742 while the 50-share Nifty slumped 491 points or 5.9% to end at 7,809. Both the benchmark indices registered their biggest single-day decline in percentage terms since January 7, 2009 when they had dropped 6.2-7.2% each.
In the broader market, BSE Mid-cap ended down 7.7% and Small-cap indices closed 8.8% lower. Market breadth ended weak with 2,460 losers and 277 gainers on the BSE.
Meanwhile, foreign investors remained net sellers in equities with huge sale of Rs 2,341 crore on Friday, as per provisional stock exchange data.
The India VIX, the measure of market's expectation of volatility over the near term, recorded its highest ever percentage gain up 64% at 28.13 compared to the previous close.
"Indian stock markets are witnessing contagion effect of caution in global markets on a suspected China slowdown. While Indian markets have remained resilient and outperformed regional peers thanks to India's better macro performance over the last two years the overhang of a global risk-off could see capital outflows leading to an excaberated correction in the markets. We continue to expect Indian markets to remain an outperformer among emerging markets," said Tirthankar Patnaik, India strategist, Mizuho Bank
“Panic has spread to Indian equities too on the back of global rout driven by Chinese actions. During this wave of selling, we may see a lot of investment opportunities from a medium to long term perspective in Indian equities, which is what we are currently focusing on. We currently hold some cash in our portfolios, and will be looking to invest that into equities as the market becomes more attractive with every decline.”, said Harsha Upadhyaya, Chief Investment Officer (Equity), Kotak Mahindra Asset Management.
"This is due to panic reaction across the world similar to what happened in August 2011 in which month the major global market fell over 6% and the Sensex fell nearly 9%. No major economy has fallen on the earth and nor Indian economy has reported any worrisome data point now. Earlier it was serious concern on the European and the US economies, now it is the turn of Chinese economy. India, which would gain out of global pain and also would post still fastest growth among the major economies in the world also succumb to the pressure. Benefit of cheap oil and materials, lower inflation, comfortable balances on both fiscal and current account of BOP, etc would once again come to rescue the Indian equities. In this suddenly changed global environment, it is most unlikely that the US Fed would tighten the rate in the short term.The domestic investors would do well, if they don't succumb to the pressures and sit tight with holding of quality stocks with comfort on valuation, balance sheet and management quality" , G. Chokkalingam, Founder & MD, Equinomics Research & Advisory.
Asian shares slumped on Monday as investors dumped riskier assets on fears that economic slowdown in China would have an impact on other economies in the continent. The benchmark Shanghai Composite plunged 9.2% while Hang Seng ended down 5.4% tracking losses in mainland China. Shares in Japan also witnessed selling pressure with the Nikkei down 4.8% while the Straits Times eased 3.8%.
European shares also opened sharply lower tracking the sharp plunge in Chinese stocks . The CAC-40, DAX and FTSE-100 trimmed some of the early losses and were down 2.3% each.
The Indian rupee also dropped to fresh two-year low amid fears of foreign capital outflows tracking weakness in domestic equities and was trading at 66.71 down 89 paise to the US dollar compared to it previous close on Friday.
Meanwhile, Reserve Bank of India governor Raghuram Rajan in his speech at FIBAC 2015 today assured the street that the central bank will have no hesitation in using foreign exchange reserves in a bid to reduce volatility.
“We have approximately $ 380 billion in reserves to be used as and when the need arises. We will have no hesitation in using our reserves when appropriate to reduce volatility in the rupee,” he said.
SECTORS & STOCKS
All sectoral indices were in the red with Realty index plunging 11% followed by Oil and Gas, Power, Capital Goods and Bankex down over 7% each among others.
Some of the Sensex stocks which hit 52-week lows today include ICICI Bank, Tata Motors, Oil and Natural Gas Corporation (ONGC), Tata Steel, Hindalco Industries, Cairn India, Gail (India), NMDC, NTPC, Tata Power Company and Vedanta.
Banks which are a proxy to the economy witnessed selling pressure on concerns that demand for credit would remain subdued on account of sluggish economic growth. The Bank Nifty was down nearly 5%. HDFC, ICICI Bank, HDFC Bank, Axis Bank and SBI crashed 5-8% each.
Shares of oil and gas companies witnessed selling pressure with some of them hitting 52-week lows after concerns over sluggish economic growth in China led to sell-off in global commodities. Further, Iran's plans to boost crude oil production in an effort to boost market share also dampened sentiment. ONGC, Gail, Reliance Industries ended down 8-13% each.
IT stocks which gained in the previous sessions witnessed profit taking with Infosys, Wipro and TCS ended down 3-5% each.
Index heavyweights Reliance Industries ended down 8.6%.
Capital goods shares also witnessed profit taking on concerns that fresh order inflows may be impacted. L&T and BHEL crashed 6-8% each.
Metal stocks weakened on worries over lower demand from China, the world's largest consumer. Vedanta dropped over 7% while Tata Steel and Hindalco were down 3-4% each.
Auto stocks witnessed profit taking on concerns that sales growth in August would remain muted. Tata Motors, Maruti Suzuki, Bajaj Auto, Hero MotoCorp and M&M were down 3-5.5% each.
Dr Reddy’s Lab ended down 4.2% after the company initiated a voluntary recall of Rivastigmine Tartrate Capsules of 1.5 mg strength from the USA market, following failed dissolution specifications.
Among other shares, IOC ended down 4%. The govermnet's 10% stake sale in the company was oversubcribed. The government on Saturday announced a floor price of Rs 387 a share for an offer for sale (OFS) on Monday.
Shares of Astra Microwave Products ended up 2% in an otherwise weak market, after the company announced the formation of a joint venture company (JVC) with M/s Rafael Advanced Defence Systems Ltd., Israel, for joint production and supply of tactical radio communication systems, electronic war-fare systems and signal intelligence systems.