Sensex crashes over 750 points, Nifty below 10,300; over Rs 3 lakh crore investor wealth wiped out
The BSE Sensex slumped over 750 points to end at a six-month low and the Nifty ended below the 10,300 mark Thursday as global indices witnessed across-the-board losses after investor sentiment was hit by heavy sell-off in world markets.
Continuous outflows by foreign funds also added to investor woes.
The BSE Sensex which commenced with a gap down opening, cracked over 1,000 points, breaching the 34,000-mark and hit a low of 33,723.53, before staging a partial recovery to touch a high of 34,325.09 in afternoon trade, It finally ended 759.74 points, or 2.19 per cent, lower at 34,001.15 - the lowest closing since April 11, reported PTI.
The Sensex had gained 461.42 points Wednesday.
“The sell-off was in sync with the slide in Asian markets after a sharp fall in the US equities on Wednesday. Rising US interest rates, and US-China trade tension will likely hurt corporate profits.” Vinod Nair, Head of Research, Geojit Financial Services told IANS.
Also, International Monetary Fund head Christine Lagarde’s comments that stock market valuations had been “extremely high”, triggered the meltdown in the US markets, and spilled over to Asia on Thursday.
At one point, the Sensex had crashed 1,000 points, before recouping some of the losses on value buying. The plunge eroded investor wealth got eroded by over Rs 3 lakh crore, reported PTI.
Heavy selling was witnessed in banking, IT, metals, auto and capital goods stocks. All 19 sector-based indices on the BSE, except the energy index, traded in the red. Led by the sharp carnage in equities, the market capitalisation of BSE-listed companies slumped Rs 3,05,625.87 crore to Rs 1,35,59,695.82 crore in late morning trade.
At 2.15 p.m., NSE’s Nifty traded at 10,240.30, down 219.80 points or 2.10 per cent from its Wednesday’s close.
The S&P BSE Sensex, which had opened at 34,063.82, traded at 33,967.32, down 793.57 points or 2.28 per cent. On Thursday, it had touched a high of 34,325.18 and a low of 33,723.53.
“This is a continuation of the sharp fall we have witnessed in the stock prices over the last couple of weeks (except for one or two days of exception).
“While most of the earlier fall could be attributed largely to domestic factors – be it the IL&FS effect and fears of contagion thereon, or the ever increasing fuel prices due to the combined effect of weakening rupee and rising global crude prices etc – the reason for the fall this morning is clearly global,” said Dheeraj Singh, head of Investments, Taurus Asset Management Co Ltd, as per PTI.
At around 2 p.m., the Indian rupee was trading at 74.17 per US dollar, after slumping to a new low of 74.48. The rupee had opened at 74.31 at the Inter-Bank Foreign Exchange Market.
Attributing the slump in stock and currency markets to external factors, a finance ministry official Thursday said more steps will be taken to check current account deficit (CAD) and hoped that the rupee would appreciate.
“What happened in US yesterday had a ripple effect here today. The IMF has downgraded global growth rate, US growth rate for next year, both these had impact on markets,” the official told reporters, according to PTI.
The government will take action at an appropriate time to check widening CAD and going forward there are indications that oil prices will fall, which will have positive implications on the rupee.
“Rupee, Balance of Payments, CAD are the main worries, we have strategy in place to tackle situation. We will take action at opportune time on these issues,” the official said.
He said Indian market is still relatively stable compared with other equity markets. “The rupee may remain firm if oil prices stay range bound. We do believe that rupee should appreciate from this level,” the official added.
The rupee has lost more than 13 per cent since the beginning of 2018. The CAD, difference between inflow and outflow of foreign exchange, widened to 2.4 per cent of GDP in the April-June quarter.
The official said that the oil prices are expected to stay range bound between 79-85 dollars a barrel in the months to come and the Indian economy will gain in the US-China ‘trade war’.
Even though there are pressures on the current account deficit, the foreign exchange reserves are good enough to withstand it, he added.
“There is nothing to worry about the current market condition. Indian equity and rupee markets are impacted by external factors. Inflation is well within limits and the fundamentals of Indian economy remain strong,” the official added.
The US Dow Jones Industrial Average slumped over 800 points or 3.15 per cent Wednesday, its biggest fall since February. US President Donald Trump blamed the drop on US Federal Reserve’s decision to hike interest rates. “The Fed has gone crazy,” Trump said.
Taking cue, the Asian stock indices too witnessed selling frenzy. Japan’s Nikkei declined 4 per cent, Australia’s benchmark ASX 200 fell 2 per cent, and Hong Kong’s Hang Seng, China’s Shanghai Composite was down more than 3 per cent.