Crashes 587 points in mid-session, stages partial recovery

The Bombay Stock Exchange sensitive index, Sensex, on Wednesday lost 365.45 points or 2.27 per cent to 15699.97, a level last seen on November 3, 2009. On Tuesday, it closed at 16065.42. Gloomy global outlook, domestic concern over slowing growth and surging inflation and falling rupee affected sentiment.

The Sensex opened weak and dropped to a low of 15478.69 at mid-session, down nearly 587 points. However, it recovered some lost ground and closed at 15699.97.

The broad-based National Stock Exchange index, 50-share S&P Nifty, dropped by 105.90 points to 4706.45, after touching a low of 4640.95.

“The Indian indices resumed their descent as the U.S. government has revised down its third-quarter GDP growth rate and a preliminary manufacturing PMI gauge in China has shown contraction for November. Political turmoil is also one of the factors that is heavily weighing on investors' morale after Parliament was adjourned for the second successive day in the ongoing winter session,” says Amar Ambani, Head of Research, IIFL.

“Markets had opened with a negative note tracking absolute weakness in Asian markets and we saw major crash in the markets by noon after European markets opened lower and touched a two-year low,” said Alex Mathews Research Head Geojit BNP Paribas Financial Services. Later in the second part of the day, the market witnessed lower level recovery but the weakness in markets made it close at lower levels.

Asian markets corrected on Wednesday on expectation that Chinese manufacturing would shrink amid faltering economy. European markets too were in the red as Germany failed to get sufficient bids at an auction of bunds and U.S. futures remained in the red.

On the sectoral front, selling pressure was witnessed in capital goods, technology, IT, oil and banking leaving just consumer durable on the gainers side. Metal stocks came down on weak economic data from China. Sugar stocks were in demand after government allowed sugar exports.

Rupee continues to slide

Falling for the eight day in a row, the rupee ended at 52.35/36, its all-time closing low against the dollar amid continuing signs of captial outflows and steep fall in stock markets. On Tuesday, it closed at 52.30.

Dealers said persistent capital outflows amid late dollar buying by importers kept the rupee under pressure despite suspected Reserve Bank of India intervention.

“As non-PSU banks entered the forex market, rupee traded strong in first-half. However, in the second-half it traded weak, mainly taking cues from global markets where dollar quoted strong against the major currencies. Domestic equities closed down by over 2 per cent which also weakened the rupee,” Pramit Brahmbhatt, Alpari Financial Services (Indai) CEO said.

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