Sensex falls by 807 pts amid a global plunge
500 stocks hit lowest levels
Dalal Street witnessed one of its worst carnages with the benchmark Sensex and Nifty ending at their lowest levels since May 2014 amid a rout in global equities. Altogether ` 3 lakh crores of investors’ wealth was wiped off and 500 stocks hit their lowest levels.
Mirroring the weakness in global stocks, the Sensex tanked by 807.07 points ( 3.40 per cent) and slipped below its psychological 23,000 mark to end the day at 22,951.83. The broader Nifty plunged by 239.35 points ( 3.32 per cent) to end the day at 6,976.35. Meanwhile, in the foreign exchange market, the rupee plunged 45 paise to end at an over 29month low of 68.30 per dollar on fresh demand for the US greenback from banks as well as importers.
The global rout was fuelled by US Federal Reserve chief Janet Yellen’s stimony to the US Congress that she does not expect to reverse the interest rate hikes started in December 2015 though the global economic turmoil poses a risk to the US economy. Global financial markets have remained jittery in the past few months in the wake of a steep fall in global crude oil prices and growing
Continued from Page 1 concerns on the health of the global economy, forcing investors to turn riskaverse and seek safety in US treasury bonds and gold. Experts said the fall in commodity prices, including oil, has raised fears about some large European banks that have high loan exposure to the commodity- linked sectors.
Elsewhere in Asia, Japan’s Nikkei 225 sank 2.31 per cent while Hong Kong’s Hang Seng and South Korea’s Kospi Index slumped 3.85 per cent and 2.93 per cent. European shares also traded deep in the red. Britain’s FTSE 100 dropped close to two per cent while Germany’s DAX, French stock market index CAC and Spain’s Madrid General Index sank 2.15 per cent, 3.35 per cent and 3.65 per cent respectively.
On Friday markets are expected to open low depending on the fall in the Nasdaq and Dow, that opened in the red, said Ambareesh Baliga, a senior independent analyst. But he said there will be some bounce back as Thursday’s carnage was absolute capitulation and panic due to the US Fed chief ’ s statement. “People after all are looking for value and valuations are decent and there should be value buying,” he said. The pain is likely to continue for the next few days and the Union Budget might be the next trigger, he said. “The emergingmarket funds, of late, have turned big sellers on the markets. We expect redemption pressure from these funds to continue. Most of these funds are sovereign wealth funds from the Middle East. Till the redemption pressure doesn’t stop, foreign portfolio investors will continue to remain net sellers of equities,” said Vijay Singhania, founder and director, Trade Smart Online. “Corporate earnings growth has failed to revive in the last 18 months. Moreover, our banking system is in distress grappling with high non- performing assets. For the markets to rally higher, there should be something to cheer about at home, which is absent at the moment. The markets are expected to remain weak until earnings visibility improves,” said Saurabh Mukherjea, chief executive officer, Institutional Equities at Ambit Capital.
India’s volatility index ( VIX) jumped 15.58 per cent on the National Stock Exchange, suggesting savvy investors have aggressively bought “options contract” as an effective hedge against any fall in the market. According to provisional data released by the stock exchanges, the foreign portfolio investors pulled out ` 1,112.66 crores from domestic equities on Thursday. The markets’ fall was further accentuated by a lower than expected quarterly numbers from State Bank of India. SBI, India’s largest state lender, reported a 62 per cent drop in net profit for the October- December quarter due to higher provisioning. The stock fell 2.99 per cent, to close at ` 154.20.