Comments
The benchmark BSE Sensex nosedived nearly 600 points owing to heavy sell-off in global markets. World stocks and commodity prices tumbled on Tuesday, as poor Chinese data saw fears about its economic health intensify.
Weak manufacturing PMI and June quarter GDP data also dampened the domestic sentiment.
The 30-share BSE index Sensex plunged 586.65 points or 2.23 per cent at 25,696.44 and the 50-share NSE index Nifty dropped 185.45 points or 2.33 per cent at 7,785.85.
Banking and financial stocks led the decline after reports of HDFC Bank's steep base rate cut on Monday sparked fears that other lenders will be able to match it only at the cost of margins.
HDFC Bank has cut its base rate by 35 basis points to 9.35 per cent from September 1 to capture wider market share. The move stoked fears that pricing pressure would lead to other banks taking a hit on their net interest margins as most banks would have a base rate of 35-65 basis points higher than that of HDFC Bank.
Sectoral indices
All BSE sectoral indices ended in the red. Among them, banking index fell the most by 3.63 per cent, followed by metal 3.24 per cent, realty 3.17 per cent and capital goods 2.74 per cent.
Gainers, losers
Top five Sensex losers were Axis Bank (-5.24%), Hindalco (-5.18%), Tata Steel (-3.93%), BHEL (-3.91%) and VEDL (-3.8%), while the lone gainer was Sun Pharma (+0.34%).
Manufacturing PMI
The manufacturing sector grew at a slower pace in August as order flow turned sluggish and forced the companies to cut prices.
The Nikkei India Manufacturing PMI — a composite monthly indicator of manufacturing performance — stood at 52.3 in August, down from a six-month high figure of 52.7 in July, indicating a slower pace of growth in the sector.
GDP growth
The country's growth rate declined to 7 per cent in the first quarter of 2015-16 even as the core sector output sputtered to a three-month low of 1.1 per cent in July.
The gross domestic product data released yesterday showed that the Indian economy expanded at an annual 7 per cent rate in the April-June quarter, slower than the provisional growth of 7.5 per cent in the previous quarter.
FII outflows
Meanwhile, foreign investors pulled out a record $2.55 billion from Indian markets in August, the highest-ever monthlyoutflow at least since 2002 as per regulatory data.
"The volatility in the markets is largely because of factors outside the control of market participants in India," Deven Choksey, managing director, KR Choksey Securities, said.
Global markets
World stocks and commodity prices tumbled on Tuesday, as poor Chinese data saw fears about its economic health intensify.
After a relatively upbeat few days for world markets, concerns about China were reignited by surveys that showed its giant manufacturing sector shrinking at its fastest pace in three years and its services sector also cooling.
European stocks fell on Tuesday after weak manufacturing data from China raised fresh concerns over the health of its economy and hit Asian markets.
Asian markets were down tracking overnight cues from Wall Street and after twin surveys showed China's manufacturing sector in the grip of its worst slump in several years, raising fresh fears about the health of its economy.
MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.3 per cent, erasing its early gains. The index shed more than 10 per cent in the month of August, its worst monthly performance since 2012, on fears of global fallout from slowing momentum in China.
China's official Purchasing Managers' Index (PMI) fell to 49.7 in August from the previous month's reading of 50.0, the weakest showing in three years.
Separately, the private Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) showed a final reading of 47.3 in August, the lowest since March 2009.
Wall Street had ended lower on Monday and wrapped up its worst month since 2012 after comments from a senior Federal Reserve official heightened fears among investors of a potential US interest hike in September.
The Dow Jones industrial average lost 0.69 per cent to end at 16,528.03 points and the S&P 500 fell 0.84 per cent to 1,972.18. The Nasdaq Composite dropped 1.07 per cent to 4,776.51.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.