Sensex Slumps Nearly 700 Points on Weak GDP, Global Selloff

Indian stock markets are on course for a big down day, with the BSE Sensex and Nifty indices falling nearly 2.5 per cent in late trading. The BSE Sensex fell nearly 700 points, while the Nifty slumped below the key 7,800 levels.

Here are 10 things to know about Tuesday’s selloff:

1) The selloff in domestic stock markets is being linked to fresh bout of weakness across Asia and Europe, where equities took a big beating on Tuesday. Japan’s Nikkei closed nearly 4 per cent lower.

2) European stock markets traded with over 2 per cent cuts, while Dow futures indicated a lower opening for the Wall Street.

3) Analysts say rising concerns of a deep-seated slowdown in China, the world’s second biggest economy, is weighing on global stocks. Investors tend to react in panic every time a negative data comes out of China.

4) China’s giant manufacturing sector contracted at the fastest pace in three years, rattling Asian markets on Tuesday. Even China’s services sector, which has been one of the few bright spots in the sputtering economy, showed alarming signs of cooling.

5) Traders are also disappointed with a series of weak economic data in India. Growth in core sector, which contributes nearly 40 per cent to industrial output, slowed to a 3-month low, while June quarter GDP grew below estimates at 7 per cent, weighing on sentiments.

6) A delay in recovery in corporate earnings has led Macquarie, Barclays and Ambit to downgrade Indian shares over the last few days.

7) Domestic stock markets are also reeling from rising momentum of selling by foreign investors. In August, foreign investors sold shares worth Rs 16,877 crore, which is a record.

8) Banking stocks led the losses and underperformed the broader markets. The Bank Nifty slumped nearly 4 per cent on Tuesday on fears that HDFC Bank’s aggressive rate cut will put pressure on margins of the banking system.

9) High beta metals and realty stocks also traded with over 3 per cent cuts; capital goods and auto stocks also fell sharply. 45 of 50 Nifty stocks traded lower.

10) Higher rupee was the only silver lining in Tuesday’s trade today. As of 2.15 p.m., the rupee traded 66.38 per dollar, 10 paise higher than yesterday’s close of 66.48.