Market crumbles under weight of bad news

Deccan Chronicle.  | RAVI RANJAN PRASAD

Business, Market

Only IT and Healthcare stocks were able to buck the trend on account of a sharp weakening in the rupee.

Rajnish Kumar, Chairman, SBI

Mumbai: Benchmark indices Sensex and Nifty 50 fell more than two per cent on Tuesday over mounting slowdown worries, as reflected in the latest economic data, escalation in US-China trade war and rapidly weakening local currency.

Incessant heavy selling by the foreign portfolio investors (FPIs), who dumped equties worth Rs 2,016.20 crore, led to panic selling even in the broader market as it opened after a long weekend.

A slew of negative news piled up over the long weekend, latest being the US and China indulging in fresh tariff war, with both sides announcing fresh rounds of import duties, and the deepening domestic slowdown, with paltry growth in eight core sectors, which slipped to 2.1 per cent during July from 7.3 per cent a year ago.

The IHS Markit India Manufacturing Purchas-ing Managers Index data also came lower at 51.4 in August from 52.5 in July, further supporting the economic slowdown view.

As expected, the market fell on Tuesday given the negative cues,with India recording the lowest GDP growth in the last 25 quarters to 5 per cent for the April-June 2019 period, lower auto sales for August, GST collections below Rs 1 lakh crore in August and fears of PSU banks merger announcement slowing down credit growth.

Big market voices also echoed the slowdown in the economy, with State Bank of India Chairman Rajnish Kumar saying, “Almost all the sectors are seeing slowdown” and Housing Develop-ment Finance Corporation Chairman Deepak Parekh saying, "Thousands of residential homes were finding no takers."

Only IT and Healthcare stocks were able to buck the trend on account of a sharp weakening in the rupee.

The market mayhem was evident from just two stocks in Nifty 50 and Sensex baskets closing in the green–Tech Mahindra and HCL Technologies, and all BSE Sectoral indices closing in the red, with BSE Metal, Bankex, Consumer Durable and Realty falling by 3.23 to 2.35 per cent.

The sharp intraday fall in the rupee to Rs 72.40 a dollar as against the previous close of 71.40, by one rupee, made matters worse for the foreign investors rushing to exit stocks.