Free Press Journal

Markets slump to 1-yr low on GDP data, Chinese pain


Sensex Red downSensex Red down

Mumbai: Markets today went into a downspiral, with the benchmark Sensex crashing 587 points to close at a one-year low of 25,696.44 owing to slower than expected GDP growth coupled with a global sell-off after a clutch of data showed China economy is in for more pain. The rupee recovered against the dollar though. In a significant development that could have far-reaching implications, the government today accepted the recommendation of the A P Shah committee that minimum alternate tax (MAT) should not be imposed on overseas portfolio investors retrospectively.

In the bullion market, gold prices topped the Rs 27,000-mark on safe haven appeal amid wedding season buying by jewellers. In Delhi, gold of 99.9 purity rose Rs 200 to end at Rs 27,060 per 10 gram while in Mumbai, it rallied Rs 150 to Rs 26,805 per 10 grams.

The free fall was mostly an offshoot of GDP data on Monday that showed the economy grew at 7 per cent in April-June, from 7.5 per cent in the preceding quarter. Not just that, Nikkei India Manufacturing PMI stood at 52.3 in August, as against 52.7 in July, a sign that the sector grew at a slower pace. Global macros were equally downbeat. Asian and European markets were at the receiving end of poor Chinese manufacturing PMI data, which suggested that the slowdown in the second-largest economy is in fact worsening.

Dismal numbers from the euro zone and Britain only added to the negative sentiment, brokers said. A sharp plunge in banking index amid margin worries over a likely race to reduce base rates contributed to the fall. The index loss was led by key stocks such as Axis Bank, ICICI Bank, SBI and RIL. The benchmark BSE Sensex cracked over 586 points, or 2.23 per cent, to end at 25,696.44, its lowest close since August 2014.

In the process, more than Rs 2 lakh crore of the investor wealth was wiped out. Total investor wealth of BSE-listed companies tumbled by as much as Rs 2,02,654.47 crore to Rs 96,25,276 crore. In the forex market, the rupee snapped its two-day losing run, recovering 26 paise to close at 66.22 against the dollar on fresh selling of the greenback by banks and exporters in overseas markets amid a retreat in equities.

The 50-share NSE Nifty too fell short of the 7,800-level by ending 185.45 points lower at 7,785.85. Selling was broad-based, which also spread to small-cap as well as mid-cap stocks, which fell up to 2.17 per cent.