Falling Asian markets, macro data drowns Sensex

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SME Times News Bureau | 01 Sep, 2015
The slide in Asian markets, especially the continuous rout in Chinese bourses and below-expected macro data sobered investor's sentiments and sent the Indian equities markets plunging on Tuesday.

The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE)
tanked by 586.65 points or 2.23 percent at 25,696.44 points.

Bearish sentiments were also witnessed at the wider 50-scrip Nifty of the National Stock Exchange (NSE). It ended the day's trade at 185.45 points or 2.33 percent down at 7,785.85 points.

The S&P BSE Sensex which opened at 26,127.04 points, closed at 25,696.44 points, down 586.65 points or 2.23 percent from the previous day's close at 26,283.09 points.

The Sensex touched a high of 26,141.07 points and a low of 25,579.88 points during the intra-day trade.

Analysts cited negative cues eminating out of Asian markets, especially the continuous slide in the Chinese exchanges to be the catalyst for the sharp fall in the domestic bourse.

"The sharp fall in the day's trade and the high intra-day volatility were caused due to the bearish cues coming in from the Asian markets. The investors are nervous about the evolving situation in China and its apparent outcome which might be a bigger challenge in the long run," Anand James, co-head, technical research, Geojit BNP Paribas, told IANS.

"The volatility is also being flared-up due to expectations of new measures by the Chinese government and central bank to stabilise the markets. This might put further pressure on the yuan and subsequently on the rupee value."

Among the Asian markets, Japan's Nikkei plunged by 3.84 percent. Hong Kong's Hang Seng plummet by 2.24 percent. China's Shanghai Composite Index dropped by 1.28 percent.

The massive implosion in the Chinese markets which has by some estimates eroded 40-45 percent of the entire stock value coupled with yuan devaluation and lower factory out has spooked the world markets.

Other factors which subdued the markets were below-expected first quarter (Q1) gross domestic product (GDP), eight core industries (ECI) and purchasing mangers index (PMI) figures. All these macro data points were below market's estimates.

"Markets are seeing a significant fall today led by the lower than expected GDP growth and a global selloff on account of the weak Chinese PMI figures, which slipped below the 50-mark in August indicating a contraction," Vaibhav Agrawal, vice president, research, Angel Broking told IANS.

The Q1 GDP came in at 7 percent, showing signs of slowing vis-a-vis the 7.5 percent expansion in the quarter before. But the growth was much higher than 6.7 percent registered in the first quarter of the last fiscal.

The ECI for select factory output slowed to 1.1 percent growth in July from an increase of 3 percent in the previous month, mainly due to a fall in steel production and marginal growth in coal. The select factory output index rose by 4.1 percent in July 2014.

The Nikkei India Manufacturing PMI (Purchasing Manufacturers Index) for the last month stood at 52.3 which is marginally down from July's 52.7.

An index reading of above 50 indicates an overall increase in the manufacturing sector, below 50 an overall decrease.

"Market shut the day with severe cuts on the back of weak global and domestic macro economic data. China’s weak PMI and India’s lower GDP growth dampened the sentiments. Sell-off was mainly triggered by the banks especially PSU banks on raising the concerns of pressure on their margins," said Gaurav Jain, director with Hem Securities.

Sector-wise, all 12 sub-indices of the BSE ended the day's trade in the red. The S&P BSE banking, automobile, capital goods, consumer durables and healthcare indices came under intense selling pressure.

The S&P BSE banking index plunged by 713.55 points, the automobile index receded by 472.84 points, the capital goods index contracted by 442.05 points, the consumer durables index declined by 272.67 points and healthcare index decreased by 263.78 points.

Major Sensex gainers during Tuesday's trade were: Sun Pharma, up 0.34 percent at Rs.900.75.

The major Sensex losers were: Axis Bank, down 5.24 percent at Rs.480.15; Hindalco Industries, down 5.18 percent at Rs.75.90; Tata Steel, down 3.93 percent at Rs.216.20; BHEL, down 3.91 percent at Rs.217.65; and Vedanta, down 3.80 percent at Rs.94.85.

In Europe, London's FTSE 100 index rose by 0.90 percent, French CAC 40 tumbled by 0.50 percent and Germany's DAX Index slipped by 0.43 percent at close of trading here.