A sell off in oil, banking and metal shares led the carnage on the domestic bourses. The barometer index, the S&P BSE Sensex, lost 1,624.51 points or 5.94% to settle at 25,741.56. The 50-unit CNX Nifty lost 490.95 points or 5.92% to settle at 7,809. The Sensex hit its lowest closing level in more than a year. The Nifty hit its lowest closing level in more than 10 months. The Nifty ended below the psychological 8,000 mark while the Sensex ended below the psychological 26,000 level. The sharp setback on the Indian bourses was triggered by a rout in Asian stocks.
The broad market depicted weakness. There were more than eight losers against every gainer on BSE. The BSE Mid-Cap index shed 7.68%. The BSE Small-Cap index dropped 8.81%. The decline in both these indices was higher than the Sensex's decline in percentage terms.
Chinese stocks led a sell-off in Asian markets as fears about the deepening effects of a slowdown in China's economy rattled investors. The sharp setback in Chinese stocks materialized as China's central bank failed to take expected action over the weekend to provide more support for the financial system. US stocks tumbled during the previous trading session on Friday, 21 August 2015, as fears about China's economy and global growth spurred heavy selling. Trading in US index futures indicated that that the US stocks will tumble again at the opening bell today, 24 August 2015. European stocks edged lower, extending a selloff in global equities spurred by worries that China's economy is slowing down more than anticipated.
Metal and mining stocks dropped on concerns about slowdown in China's economic growth. Banks stocks declined. Index heavyweight ITC fell on reports that the Uttar Pradesh Food and Drug Authority will soon file a case against the company after it found lead far in excess than permissible limit in its Yippee Noodles. Shares of upstream oil exploration and production (E&P) firms dropped along with crude oil prices.
Meanwhile, Finance Minister Arun Jaitley expects Indian financial markets to stabilize soon, according to news reports. Jaitley has attributed the current turmoil in Indian financial markets to external factors, according to reports. Meanwhile, Reserve Bank of India Governor Raghuram Rajan said at a banking conference in Mumbai today, 24 August 2015, that it is not the role of the central bank of a country to elevate sentiments unduly to deliver booster shots to the stock market.
There was heavy selling of Indian stocks by foreign portfolio investors (FPIs) during the previous trading session on Friday, 21 August 2015. FPIs sold shares worth net Rs 2292.98 crore into secondary equity market on Friday, 21 August 2015, as per data from Central Depository Services (India). Domestic institutional investors (DIIs) bought shares worth a net Rs 1524.10 crore on Friday, 21 August 2015, as per provisional data released by the stock exchanges.
Indian stocks may remain volatile in the near future as traders roll over positions in the futures & options (F&O) segment from the near month August 2015 series to September 2015 series. The near month August 2015 derivatives contracts are set to expire on Thursday, 27 August 2015.
The S&P BSE Sensex shed 1,624.51 points or 5.94% to settle at 25,741.56, its lowest closing level since 11 August 2014. The index fell 1,741.35 points at the day's low of 25,624.72 in late trade. The index fell 635.67 points at the day's high of 26,730.40 at the onset of trading session.
The Nifty lost 490.95 points or 5.92% to settle at 7,809, its lowest closing level since 17 October 2014. The index hit a low of 7,769.40 in intraday trade. The index hit a high of 8,060.05 in intraday trade.
The BSE Mid-Cap index dropped 861.91 points or 7.68% to settle at 10,354.74. The BSE Small-Cap index fell 1,022.54 points or 8.81% to settle at 10,587.90. The decline in both these indices was higher than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was extremely weak. There were more than eight losers against every gainer on BSE. 2,486 shares fell and 306 shares rose. A total of 52 shares were unchanged.
The total turnover on BSE amounted to Rs 4376 crore, higher than turnover of Rs 3462.56 crore registered during the previous trading session.
Among the sectoral indices on BSE, the S&P BSE Healthcare index (down 6.75%), BSE Auto index (down 7.19%), BSE Bankex index (down 6.99%), BSE Capital Goods index (down 7.09%), BSE Consumer Durables index (down 7.23%), BSE Metal index (down 7.18%), BSE Oil & Gas index (down 9.2%), BSE Power index (down 8.12%) and BSE Realty index (down 10.93%) underperformed the Sensex. The S&P BSE FMCG index (down 4.54%), BSE IT index (down 4.97%) and BSE Teck index (down 5.23%) outperformed the Sensex.
Realty stocks tumbled. Housing Development & Infrastructure (down 18.99%), Indiabulls Real Estate (down 17.4%), DLF (down 15.56%), Unitech (down 12.57%), D B Realty (down 12.12%), Prestige Estates Projects (down 7.5%), Godrej Properties (down 7.12%) and Sobha (down 6.7%) edged lower.
Shares of power generation and power distribution firms edged lower. Adani Power (down 17.58%), JSW Energy (down 16.28%), Torrent Power (down 14.2%), Reliance Infrastructure (down 13.69%), Reliance Power (down 13.06%), NHPC (down 9.32%), GVK Power & Infrastructure (down 8.62%), Tata Power (down 8.58%), NTPC (down 6.93%) and Power Grid Corporation of India (down 1.5%) edged lower.
Banks stocks declined. Among PSU banks, Bank of India (down 15.8%), IDBI Bank (down 14.83%), Syndicate Bank (down 13.77%), Andhra Bank (down 13.63%), Union Bank of India (down 13.29%), Bank of Baroda (down 8.57%), State Bank of India (down 8.19%), United Bank of India (down 7.17%), Corporation Bank (down 7.02%), and Indian Overseas Bank (down 6.61%) edged lower.
Punjab National Bank (PNB) tumbled 10.78% at Rs 142.40. PNB on Saturday, 22 August 2015, announced that the bank will seek the approval of shareholders at an Extraordinary General Meeting (EGM) on 28 September 2015 for preferential allotment equity shares aggregating up to Rs 1732 crore to the bank's principle shareholder viz. the Government of India (GoI).
Among private sector banks, Yes Bank (down 9.02%), ICICI Bank (down 8.87%), Axis Bank (down 8.2%), Kotak Mahindra Bank (down 6.08%), IndusInd Bank (down 4.39%) and HDFC Bank (down 3.92%) edged lower.
Metal and mining stocks dropped on concerns about slowdown in China's economic growth. Tata Steel (down 13.11%), Hindustan Zinc (down 10.56%), JSW Steel (down 8.65%), Hindalco Industries (down 8.37%), Jindal Steel & Power (down 4.53%) and National Aluminium Company (down 2.96%) edged lower. China is the world's largest consumer of copper, aluminum and steel.
Steel Authority of India (Sail) declined 9.12% at Rs 50.35. The Minister for Steel & Mines Narendra Singh Tomar on Friday, 21 August 2015, announced that the Government of India intends to revive Visvesvaraya Iron & Steel (VISL) by modernization and expansion of its facilities with an investment of Rs 1000 crore. However, this investment will be subject to recommendations of the consultant and approval by the board of directors of Sail. VISL's steel plant is located in Karnataka. VISL is a unit of Sail. Sail is a state-run steel giant. Tomar said after visiting the VISL steel plant that he has held two meetings with the Chief Minister of Karnataka and raised the issue of allotment of mines, including 240 Ha of iron ore mines in the Ramanadurga area to VISL for iron ore security. The Chief Minister has assured to actively consider the matter on priority basis.
Vedanta declined 15.3% at Rs 80.25. The company announced during trading hours today, 24 August 2015, that the company has allotted 20,000, 9.45% Secured, Rated, Non-Cumulative, Redeemable, Non-Convertible Debentures (NCDs) aggregating to Rs 2000 crore to State Bank of India (SBI). The NCDs are long term funds and this issuance will reduce the company's cost of funds, Vedanta said.
Shares of coal major Coal India dropped 3.56% at Rs 336.30. The stock hit a high of Rs 343.80 and a low of Rs 332.95 in intraday trade.
Index heavyweight and cigarette major and FMCG firm ITC fell 2.93% at Rs 320.25 on reports that the Uttar Pradesh Food and Drug Authority will soon file a case against the company after it found lead far in excess than permissible limit in its Yippee Noodles. The stock hit a high of Rs 329.20 and a low of Rs 315.85 in intraday trade.
According to recent media reports, laboratory tests on a sample of Yippee noodles seized from a local mall in Aligarh have found higher than permitted lead levels. The laboratory test report has been sent to the FDA Chief Commissioner for permission before filing an official case, according to reports. The process is expected to take a few weeks, reports added.
Index heavyweight and housing finance major HDFC fell 5.03% at Rs 1,166.80. The stock hit a high of Rs 1,201 and a low of Rs 1,157.75 in intraday trade.
Shares of public sector oil marketing companies (PSU OMCs) tumbled. BPCL (down 8.01%) and HPCL (down 10.03%) edged lower.
Indian Oil Corporation (IOCL) dropped 4.11% at Rs 378.25 amid poor response from retail investors to the divestment of Government of India's up to 10% stake in the company through the stock exchanges mechanism. Bids were received for a total of 28.74 crore shares for the Offer for Sale (OFS) of Government of India's (GoI) up to 10% stake in Indian Oil Corporation (IOCL) through the stock exchanges mechanism, as per data from BSE website. The OFS received strong response from the non-retail investors' category. But the response to the OFS from retail investors was muted. The retail investors portion got bids for 88.87 lakh as against 4.85 crore shares reserved for this category of investors. The non-retail investors portion got bids for 27.85 crore shares as against 19.42 crore shares reserved for this category of investors. The indicative price for the OFS was Rs 387 per share.
The OFS commenced at 9:15 IST and closed at 15:30 IST. The floor price for the OFS was fixed at Rs 387 per share. Retail investors will be allocated shares at a discount of 5% to the Cut-Off-Price entered by them.
Shares of upstream oil exploration and production (E&P) firms dropped along with crude oil prices. Cairn India (down 13.49%), Oil India (down 5.99%), ONGC (down 11.17%) and Reliance Industries (down 8.64%) edged lower.
In the global commodities markets, Brent crude oil futures edged lower as concerns about a global supply glut added to worries over potentially weaker demand from China. Brent for October settlement was currently off $1.69 a barrel at $43.77 a barrel. The contract had fallen $1.16 a barrel or 2.49% to settle at $45.46 a barrel during the previous trading session.
India imports about 80% of its crude requirements and a decline in crude eases concerns on fiscal deficit, inflation and gives more room for the government to boost growth through spending on infrastructure. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports.
In the foreign exchange market, the rupee fell below 66 against the dollar. The partially convertible rupee was hovering at 66.655, compared with its close of 65.83 during the previous trading session.
Key indices edged lower for the third straight trading session today, 24 August 2015. The Sensex has declined 2,190.08 points or 7.84% in the preceding three trading sessions from a recent high of 27,931.64 on 19 August 2015. The Sensex has declined 2,373 points or 8.44% in this month so far (till 24 August 2015). The Sensex has fallen 1,757.86 points or 6.39% in this calendar year so far (till 24 August 2015). The Sensex is off 4,283.18 points or 14.26% from a record high of 30,024.74 hit on 4 March 2015.
Meanwhile, Reserve Bank of India Governor Raghuram Rajan was quoted as saying at a banking conference today, 24 August 2015, that the RBI has no hesitation in using the foreign exchange reserves when appropriate to reduce volatility in the rupee. India has steadily built up its foreign exchange reserves to a record high of more than $355 billion since Rajan took the helm of the RBI in September 2013, when the rupee was in the midst of its worst crisis in more than two decades.
Meanwhile, a committee headed by A.P. Shah, chairman of the Law Commission, has reportedly suggested sparing foreign portfolio investors (FPIs) from the levy of minimum alternate tax (MAT) for the period prior to 1 April 2015. If the government accepts the recommendations of the committee, it would provide a significant relief to foreign investors facing several years of levies on capital gains made by them. In the February 2015 Budget, the government had exempted FPIs from MAT starting 1 April 2015, but had not made the clarification retrospective. The tax row started after the income-tax department started demanding MAT from foreign investors on capital gains accruing to them from the sale of shares, citing an August 2012 order by the Authority for Advance Rulings (AAR) in the case of Castleton Investment that MAT is applicable to both domestic and foreign companies. MAT is a tax levied on profit-making entities that don't pay corporate income tax because of exemptions and incentives. FPIs have argued that MAT is applicable only to domestic companies that have a base in India. The government appointed the Shah panel to defuse the row that threatened India's image as an investment destination. The Shah committee submitted its report to the government last month. The tax department had earlier clarified that MAT will not apply to investment routed through countries with which India has a tax treaty.
Meanwhile, India's weather office, the India Meteorological Department (IMD), said in a daily report issued yesterday, 23 August 2015, that for the country as a whole, cumulative rainfall during this year's monsoon season was 10% below the Long Period Average (LPA) until 23 August 2015. Region wise, the rainfall was 13% below the LPA in Central India, 6% below the LPA in East & Northeast India, 3% below the LPA in Northwest India and 1% below the LPA in South Peninsula until 23 August 2015.
The June-September southwest monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation.
In overseas markets, European stocks edged lower today, 24 August 2015, extending a selloff in global equities spurred by worries that China's economy is slowing down more than anticipated. Key indices in Germany, UK and France were off 2.03% to 3.05%.
Chinese stocks led a sell-off in Asian markets today, 24 August 2015, as fears about the deepening effects of a slowdown in China's economy rattled investors. In mainland China, the Shanghai Composite lost 8.49%. In Hong Kong, the Hang Seng index lost 5.17%. The sharp setback in Chinese stocks materialized as China's central bank failed to take expected action over the weekend to provide more support for the financial system. China's surprise move to devalue its yuan two weeks ago which could make its exports more competitive and a string of weak data signal the economy may be feebler than expected, despite a campaign to rev up growth including interest rate cuts and measures to boost lending.
In other Asian markets, key benchmark indices in Indonesia, Japan, Singapore, South Korea and Taiwan lost 2.47% to 4.84%.
Trading in US index futures indicated that the Dow could slump 410 points at the opening bell today, 24 August 2015. US stocks tumbled on Friday, 21 August 2015, as fears about China's economy and global growth spurred heavy selling.
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