Chinese fall, US rate fear add to punch
Representational Image (Photo: AFP)
Mumbai: The Indian equity markets plunged steeply on Monday on the fears of a regulatory clampdown on PNotes and also in reaction to a sharp setback in Chinese equity markets.
Further, there was also concern regarding an earlier than expected hike in interest rate by the US Federal Reserve after data released during the weekend showed that US jobless claims fell to its lowest level in last 42 years.
The Sensex nose-dived 550.93 points to end the trading session at 27,561.38 while the Nifty closed the session at 8,361 losing 160.55 points.
“A host of both domestic and global factors triggered heavy selling in India. The sharp fall in Chinese equities had raised concerns about its domestic economic growth. A slow down in China will jeopardise any revival in the global economic growth. This could also put pre-ssure on global commodities,” said Rikesh Parikh, vice-president, equities at Motilal Oswal
Financial Services.
Metal stocks were the major losers on Monday with Tata Steel and Hindalco losing 5.17 per cent and 4.40 per cent. Other notable losers were Hero Motocorp, Axis Bank and Bharti Airtel.
“Recommendations from the Supreme Court-appointed SIT that asked Sebi to do more to identify the end-owners of P-notes and restrict their transfer, also contributed a fall in Indian indices. Markets fear a reversal of flows from FPI’s following this move,” said Hiren Dhakan, associate fund manager, Bonanza Portfolio.
He added that the markets would continue to remain volatile for the upcoming trading sessions and the Nifty could trade in a range of 8,100-8,500 in the near term.
Shanghai bourse sees biggest fall in 8 years
Chinese shares slid more than eight per cent on Monday as an unprecedented government rescue plan to prop up valuations ran out of steam, throwing Beijing’s efforts to stave off a deeper crash into doubt.
Major indexes suffered their largest one-day drop since 2007, shattering three weeks of relative calm in China’s volatile stock markets since Beijing unleashed a barrage of support measures to arrest a slump that started in mid-June.
“The lesson from China’s last equity bubble is that, once sentiment has soured, policy interventions aimed at shoring up prices have only a short-lived effect,” wrote Capital Economics analysts in a research note reacting to the slide.
The CSI300 index of the largest listed companies in Shanghai and Shenz-hen tumbled 8.6 per cent to 3,818.73 points, while the Shanghai Composite Index lost 8.5 per cent to 3,725.56 points.
The market gyrations have stoked fears among global investors about the broader health of the Chinese economy, hitting prices of growth-sensitive commodities such as copper, which fell on Monday to not far from a 6-year low.
Stocks fell across the board on Monday, with 2,247 companies falling, leaving only 77 gainers.
Some analysts said talk had circulated among traders that the China Securities Financial Corp had returned ahead of schedule some loans it took to stabilise the stock market, highlighting investor concern that Beijing’s commitment to supporting prices may be flagging.
( Source : deccan chronicle/agencies )
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