Mumbai: The Sensex and Nifty 50 fell by over two per cent on mounting slowdown worries reflected in the latest economic data, intensification of the US-ChIna trade war and the Indian rupee’s sharp weakening.
The market benchmark Sensex crashed about 770 points on Tuesday due to the broad-based panic selloffs as the dismal GDP numbers, weak core sector growth and disappointing auto sale numbers pointed to a deepening economic crisis.
Likewise, the NSE Nifty tanked over 225 points to dip below the 10,800-mark. Massive selloffs in equities saw investor wealth eroding by Rs 2.55 lakh crores.
The sharp fall in the rupee to '72.40 per US dollar, to a nine-month low, against the previous close at '71.40 to the dollar, made matters worse for foreign investors.
The Indian markets opened on Tuesday after an extended weekend sharply lower, reacting to the worsening macro-economic situation and weak global cues. The continued heavy selling by foreign portfolio investors of equities worth '2,016.20 crores led to panic selling even in the broader market.
A slew of negative news already piled up over the long weekend, the latest being the US and China indulging in a fresh tariff war, with both sides announcing a fresh round of import duties, as well as domestic slowdown reflected in poor growth in eight core sectors, which slipped to 2.1 per cent during July, in comparison to 7.3 per cent in the corresponding month last year, further dampened market sentiments.
The IHS Markit India Manufacturing PMI (purchasing managers index) data also came lower at 51.4 in August from 52.5 in July, further supporting a slowdown view in the economy.
The market fall after the Monday holiday was a given, with negative cues in form of the lowest GDP growth in the past 25 quarters at five per cent for the April-June 2019 period, lower auto sales for August, the August GST collections falling below Rs 1 lakh crores and fears of the PSU banks’ merger announcement slowing down credit growth.
Major market voices also echoed a slowdown in the economy, with State Bank of India chairman Rajnish Kumar saying “almost all the sectors are seeing a slowdown”, and Housing Development Finance Corporation chairman Deepak Parekh saying that “thousands of residential homes were finding no takers”.
Only IT and healthcare stocks were able to buck the trend on account of a sharp weakening in the rupee.
The financial stocks were impacted the most, with the Nifty Bank index down 2.04 per cent and Nifty PSU Banks down 4.87 per cent. Heavyweights led the fall, with ICICI Bank (-4.35 per cent), SBI (-2.08 per cent), HDFC Bank (-1.23 per cent) and HDFC (-3.60 per cent).
The PSU bank losers included PNB (-8.94 per cent), Canara Bank (11.94 per cent), Oriental Bank of Commerce (-9.99 per cent), Union Bank (-10.11 per cent) and Indian Bank (-11.96 per cent).
