Border clash, GDP worries fell stocks
Sebi’s new margin rules sour sentiments
Market benchmark Sensex fell more than 1,600 points intra- day on fresh China military buildup and unconfirmed reports of clashes in the Ladakh region. This unexpected development together with fear of a likely sharp fall in the first quarter GDP growth, scheduled to be announced after market hours, led to profit- taking in the market.
The selling pressure may increase on Tuesday, with GDP contracting by - 23.9 per cent in the June quarter.
“Indian Army informed that Chinese troops violated the earlier agreement and carried out provocative military movements to change the status quo on the nights of August 29- 30,” reports said.
Sameet Chavan, chief analyst- technical and derivatives, Angel Broking, said, the sell- off was triggered mainly by the news of India- China clash once again taking place at the border. This resulted in a massive liquidation in the market by continued selling in the remaining part of the day.
New Sebi rule for margins in equity trading coming into effect from September 1 also played spoilsport in the second half of trading, as the market regulator has declined an extension being sought by the broking community.
Sensex and Nifty- 50 finally closed more than 2 per cent down after strong early morning gains pushed the Sensex above the 40,000 mark.
The Sensex closed 839 points down at 38,628.39, recovering partly from the day's low of 38,395.89 and the Nifty- 50 closed at 11,387.50, down by 260 points.
Investors lost more than Rs 4.55 lakh crore in a day as the broader market fell more, with the BSE Midcap Index down 3.79 per cent and the BSE Small- cap Index down 4.73 per cent.
All sectoral indices closed down by 2 to 4.5 per cent except the IT index, which was down over half a per cent. Sectoral heavyweight banks and financials fell heavily with the BSE Bankex Index plunging 3.29 per cent and the Nifty Bank, by 3.14 per cent.
Deepak Jasani, head of retail research, HDFC Securities, said, "The change in margin system and securities pledgerepledging could undoubtedly bring disruptions in volumes of daily trading, as there is insufficient preparation and validation by the participants in this system, viz. exchanges, depositories, depository participants, Clearing Corporation, brokers and clients."