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Indian shares plunged over one per cent as investors feared fresh rate cuts in China may not be enough to stabilise its slowing economy or halt a stocks collapse that is wreaking havoc in global markets.
The 30-share BSE index Sensex ended lower by 317.72 points or 1.22 per cent at 25,714.66 and the 50-share NSE index Nifty ended down by 88.85 points or 1.13 per cent at 7,791.85.
Among BSE sectoral indices, banking index fell the most by 1.68 per cent, followed by healthcare 1.14 per cent, TECk 1.04 per cent and oil & gas 0.98 per cent. On the other hand, power index was up 1.64 per cent, followed by metal 0.23 per cent and infrastructure 0.12 per cent.
Top five Sensex gainers were BHEL (+3.45%), Tata Motors (+2.31%), Bajaj Auto (+1.79%), Wipro (+1.46%) and Coal India (+1.22%), while the major losers were HDFC (-3.77%), Hero MotoCorp (-3.45%), M&M (-3.07%), SBIN (-3.00%) and Bharti Airtel (-2.57%).
Chinese markets were unimpressed with the central bank's strong monetary easing measures announced on Tuesday night, believing much more official support is needed, and traders said shares remained vulnerable to another sell-off.
Trading was highly volatile ahead of the August derivatives contracts expiry on Thursday.
"People are confused, it shatters the confidence. After a massive earthquake, you feel tremors for a few days," said G. Chokkalingam, founder of Equinomics, a Mumbai-based research and fund advisory firm.
A report by SMC Investments and Advisors said: "Most of the Asian stocks fell today as investors feared fresh rate cuts in China would not be enough to stabilise its cooling economy or halt a collapse in its stock markets. Overnight, US stocks ended lower after staging a smart rally as concerns about China's economy outweighed lower valuations that some earlier saw as bargains. China's central bank cut its key interest rates and reserve ratio in a surprise move on Tuesday to further lower financing costs for businesses amid a sharp fall in stock markets this week. The interest rates were reduced by 0.25 percentage points each, the People's Bank of China said in a statement on its website. The benchmark one-year lending rate was cut to 4.6 per cent and the deposit rate was slashed to 1.75 per cent. The new rates are effective from August 26. The latest easing cycle began in November last year, when the bank cut the lending rate for the first time in more than two years."
Despite the volatility many brokerages advised investors to look for 'bottom-up' investing ideas on optimism that India remains in a sweet spot compared to its peers led by to a fall in commodity prices.
Global markets
Europe’s main stock markets , which had surged on Tuesday after China’s moves, reopened 2 per cent down as the jittery mood returned and sent investors back into safe-haven German and US government bonds.
Asian stocks fell on Wednesday as investors feared fresh rate cuts in China would not be enough to stabilise its cooling economy or halt a collapse in its stock markets.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2 per cent in early trade and was just shy of a three-year low hit in the previous session.
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