Mumbai: A sharp sell-off in the Chinese equities markets had a domino effect on Asian markets including India with the benchmark Sensex and Nifty plunging close to 2 per cent on Wednesday. The Chinese financial market regulator’s failure to prevent the continuing slide in local equities has raised concerns about further acceleration in economic slowdown in the world’s second largest economy.
The growing fear about a slowdown in China sparked a sell-off in global commodities that pulled down the prices of base metals like copper and aluminum to their six- year lows on the London Metal Exchange (LME). The Sensex nosedived 483.97 points or 1.72 per cent to end the day at 27,687.72 while the Nifty slipped below its 200-day moving average to close the day at 8,363.05, down 147.75 or 1.74 per cent.
While Japan’s Nikkei and South Korea’s Kospi Index fell 3.14 per cent and 1.18 per cent respectively, China’s Shanghai Composite and Hong Kong’s Hang Seng slumped 5.91 per cent and 5.84 per cent respectively.The Shanghai Composite has tanked nearly 28 per cent in just 16 trading sessions after rallying nearly 155 per cent during the past one year.
“The global markets are worried about the impact of Chinese stock market meltdown on other asset classes. They fear that the crisis could spill over to other asset classes like commodities and real estate. If that is the case, it could seriously hurt the growth prospects of commodity producing countries and impact the global economic growth,” said Uday Narayan Dubey, vice-president, institutional desk at R.K.Global, told this correspondent.
Metal stocks led the slide in the domestic equities. While the shares of Vedanta slumped 7.85 per cent, Hindalco and Tata Steel dropped 5.13 per cent and 4.72 per cent respectively. Tata Motors, which has a sizeable presence in China saw its share price shedding 6.17 per cent.
According to the provisional data released by the stock exchanges, foreign portfolio investors (FPI) sold shares worth Rs 354.32 crore. The broader markets also remained weak with 1,812 stocks traded on the Bombay Stock Exchange (BSE) ending the day deep in the red as compared to 942 stocks that advanced.
