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Sensex tumbles to 19-month low on China market rout

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As another China led selloff gripped global markets, Indian stocks witnessed a steep slide, with the barometer index, the S&P BSE Sensex, falling below the psychological 25,000 level. The Sensex lost 554.50 points or 2.18% to settle at 24,851.83. The 50-unit Nifty 50 index slumped 172.70 points or 2.23% to settle at 7,568.30. Stocks from metal and mining sector, oil exploration and production firms and public sector banks led losses as the two key benchmark indices fell for the fourth day in a row. The Sensex hit its lowest closing level in more than 19 months. The Nifty hit its lowest closing level in more than 17 weeks. A fresh rout in Chinese stocks pulled global markets sharply lower. Trading was halted in mainland China after China's central bank continued to fix the onshore yuan's value lower to the US dollar.

After opening with a downward gap, the Sensex and the Nifty remained in negative zone throughout the trading session.

Shares of oil exploration and production (E&P) companies edged lower as global crude oil prices fell sharply. Concerns about Chinese demand sent shares of Tata Motors tumbling. Shares of engineering and construction major L&T edged lower on concerns that the slowdown in the Middle East due to the crash in crude oil prices could affect the company's revenue. Axis Bank moved lower after reports that the government is mulling to sell a part of its stake in the private sector bank.

All the nineteen sectoral indices on BSE registered losses. Metal and mining stocks edged lower on concerns over China's economic growth.

Trading in mainland China was suspended for the rest of the day after the CSI 300 index tumbled more than 7% in early trade, triggering the market's circuit breaker for a second time this week. China's central bank again surprised markets by setting onshore yuan's value lower to the US dollar, deepening concerns about the economy and sending the domestic stock markets tumbling. The People's Bank of China set the daily yuan reference-exchange rate against the US dollar 0.5% weaker compared with the previous day's closing level, marking the largest adjustment toward yuan weakness since the currency devaluation on 13 August 2015.

European stock markets moved sharply lower on the back of more turbulence in China, where markets were halted for trade after significant losses. US stock futures slumped, indicating a downbeat open on Wall Street as another trading halt in China and sliding oil prices fueled heavy selling. Trading in US index futures indicated that the Dow Jones Industrial Average could tumble 425 points at the opening bell. US stocks closed sharply lower yesterday, 6 January 2015, pressured by continued concerns about global economic growth, declining oil prices and increased geopolitical tensions.

The Sensex lost 554.50 points or 2.18% to settle at 24,851.83, its lowest closing level since 4 June 2014. The index tanked 580.63 points or 2.28% at the day's low of 24,825.70. The index fell 175.98 points or 0.69% at the day's high of 25,230.35.

The Nifty slumped 172.70 points or 2.23% to settle at 7,568.30, its lowest closing level since 7 September 2015. The index skidded 184.40 points or 2.38% at the day's low of 7,556.60. The index lost 66.05 points or 0.85% at the day's high of 7,674.95.

All the nineteen sectoral indices on BSE edged lower. The BSE Basic Materials index (down 3.65%), BSE Utilities index (down 2.56%), BSE Auto index (down 3.72%), BSE Energy index (down 2.36%), BSE Oil & Gas index (down 2.83%), BSE Realty index (down 4.5%), BSE Power index (down 3.45%), BSE Finance index (down 2.38%), BSE Metal index (down 3.72%), BSE Bankex index (down 2.38%), BSE Industrials (down 3.54%), BSE FMCG index (down 2.23%) underperformed the Sensex. The BSE Telecom index (down 1.44%), BSE IT index (down 1.57%), and BSE Healthcare index (down 2.12%) outperformed the Sensex.

The broad market depicted weakness. There were more than three losers against every gainer on BSE. 2,198 shares declined and 680 shares rose. A total of 101 shares were unchanged.

The BSE Mid-Cap index dropped 2.61%. The BSE Small-Cap index lost 2.87%. The decline in both these indices was higher than Sensex's decline in percentage terms.

The total turnover on BSE amounted to Rs 3582 crore, lower than turnover of Rs 4098.78 crore registered during the previous trading session.

Metal and mining stocks edged lower on concerns over China's economic growth. Vedanta (down 8.89%), Jindal Steel & Power (down 10.44%), Tata Steel (down 6.52%), Hindalco Industries (down 4.47%), Steel Authority of India (down 7.5%), Hindustan Zinc (down 4.52%), National Aluminium Company (down 4.15%), JSW Steel (down 2.99%) and NMDC (down 2.65%) declined. China is the world's largest consumer of steel, copper and aluminum.

Meanwhile, the High Grade Copper for March 2016 delivery was currently down 2.73% at $2.031 per pound on the COMEX.

Shares of oil exploration and production (E&P) companies edged lower as global crude oil prices fell sharply. Cairn India (down 7.6%), Oil India (down 3.31%), ONGC (down 4.61%) and Reliance Industries (down 1.83%) declined. Lower crude oil prices would result in lower realizations from crude sales for oil exploration firms.

Shares of state-run oil marketing companies (PSU OMCs) also declined. BPCL (down 3.45%), HPCL (down 2.85%) and Indian Oil Corporation (down 2.1%) edged lower.

In the global commodities markets, crude oil prices fell sharply as rising volatility in the Chinese stock market and further weakness in the Chinese yuan triggered concerns crude demand will be more depressed amid a growing global surplus. Brent for February settlement was currently off $1.04 a barrel at $33.19 a barrel. The contract had lost $2.19 a barrel or 6.01% to settle at $34.23 a barrel during the previous trading session.

Concerns about Chinese demand sent shares of Tata Motors tumbling. The stock fell 6.03% at Rs 343.65. The stock hit a high of Rs 359.85 and a low of Rs 338.40 in intraday trade. China is a key market for Tata Motors' British luxury car unit Jaguar Land Rover (JLR).

Bharat Heavy Electricals (Bhel) slumped 6.98% at Rs 155.85. The stock hit a high of Rs 164.50 and a low of Rs 153 in intraday trade. The company during market hours today, 7 January 2016, announced that it has commissioned two 220/20kV substations in Afghanistan. The project was executed by Bhel on engineering, procurement and construction (EPC) basis.

Shares of engineering and construction major L&T edged lower on concerns that the slowdown in the Middle East due to the crash in crude oil prices could affect the company's revenue. The stock fell 2.69% at Rs 1,206.30. The stock hit a low of Rs 1,200 in intraday trade, which is a 52-week low for the stock. According to reports, the Middle East region contributes about 25-30% to the L&T's international order book. The consolidated order book for the L&T group rose 14% to Rs 244097 crore as at 30 September 2015 compared with order book as on 30 September 2014. International order book constituted 28% of the consolidated order book.

Meanwhile, L&T announced after market hours today, 7 January 2016, that L&T Hydrocarbon Engineering (LTHE), a fully owned subsidiary of L&T, in consortium with McDermott has bagged an offshore contract from ONGC valued at Rs 2450 crore for the development of ONGC's Vashista and S1 deepwater fields situated off the East Coast of India. LTHE's share in the consortium is Rs 640 crore.

Bank stocks skidded. Among public sector banks, IDBI Bank (down 6.38%), Bank of Baroda (down 6.16%), Punjab National Bank (down 4.46%), Indian Overseas Bank (down 3.75%), Union Bank of India (down 5.1%), Canara Bank (down 4.2%), Andhra Bank (down 3.64%), State Bank of India (down 3.43%), Bank of India (down 4.56%), Indian Bank (down 2.12%) and Corporation Bank (down 3.19%) declined.

Among private sector banks, Yes Bank (down 3.56%), ICICI Bank (down 1.24%), IndusInd Bank (down 1.35%), HDFC Bank (down 1.16%) and Kotak Mahindra Bank (down 1.6%) edged lower.

Axis Bank declined 4.98% to Rs 409.35 after reports that the government is mulling to sell a part of its stake in the private sector bank. The government is considering the sale to meet its asset sales target, report added. The Government of India (GoI) through the Specified Undertaking of the Unit Trust of India (SUUTI) holds 11.56% stake in Axis Bank as per the shareholding pattern as on 30 September 2015.

HDFC fell 2.37% at Rs 1,179.80. The stock hit a high of Rs 1,203.65 and a low of Rs 1,175 in intraday trade. The company after market hours yesterday, 6 January 2016, announced that it will issue secured redeemable non-convertible debentures worth Rs 690 crore on private placement basis to select individuals. The coupon rate on debentures is 8.45% per annum. The issue is open only for a single day on 8 January 2016. HDFC plans to augment its long-term resources with the proceeds from the issue. The proceeds would be utilized for financing/refinancing the housing finance business requirements of the company, HDFC said.

Index heavyweight and IT major Infosys fell 1.7% to Rs 1,051.25. The stock hit high of Rs 1,067.95 and low of Rs 1,048.30 in intraday trade.

Index heavyweight and cigarette maker ITC shed 1.75% to Rs 309.60. The stock hit high of Rs 314.40 and low of Rs 308.80 in intraday trade.

Key indices fell for the fourth day in a row today, 7 January 2016. The Sensex has declined 1,309.07 points or 5% in the preceding four sessions from its close of 26,160.90 on 1 January 2016. The Sensex has declined 1,265.71 points or 4.84% so far this month (till 7 January 2016). The Sensex is off 5,172.91 points or 17.22% from a record high of 30,024.74 hit on 4 March 2015.

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First Published: Thu, January 07 2016. 16:49 IST
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