Biggest fall ever: Sensex tanks 1,624 points in single day as global slowdown worry looms

All hell broke loose on Dalal Street as the benchmark Sensex joined global equity markets carnage and crashed to its biggest single-day fall on Monday, tumbling over 1,600 points or nearly 6 percent lower, perplexed by growing pessimism about the worsening global economic scenario. Even as investors across the globe were beginning to feel the jitters of rapidly slowing Chinese economy, the disappointing US manufacturing sector data for August announced last Friday created ripples amongst the investor fraternity who turned risk-averse and exited stocks in droves. As the stock market was left bleeding under across-the-board selling pressure, domestic investors felt the heat as Rs 7 lakh crore worth of its wealth were lost in today’s mayhem. [caption id=“attachment_2405672” align=“alignleft” width=“380”]  Reuters[/caption] After taking a hit of 1,741 points in intra-day trade, the 30-share BSE S&P Sensex closed below the 26,000-mark at a one-year low of 25,741.56, down 1,624.51 points, or 5.9 percent lower. The Sensex surpassed its previous biggest single-day fall of 1,408 points in absolute terms on 21 January 2008, which was at the onset of US subprime crisis. The broader 50-share CNX Nifty slipped below the crucial 8,000-mark to end at 7,809, down 490.95 points, or 5.9 percent. The broader market ended weak with 2,477 stocks declining against 303 advances on BSE. Massive offloading of shares also engulfed other Asian markets as well, with China’s Shanghai Composite index leading the pack, crashing 8.5 percent. While Hang Seng crumbled 5.2 percent, Japan’s Nikkei slumped 4.6 percent. Even as the markets witnessed unabated selling pressure, soothing comments from the Finance Minister Arun Jaitley and RBI governor Raghuram Rajan failed to allay investors’ fears. Along with stock markets, currency market, too, kept losing ground as rupee hit an intra-day low of 66.7325 before trading at 66.69 against dollar, down 86 paise. “I wish to reassure the markets that our macroeconomic factors are under control as the economy is in a much better position relative many other economies,” Rajan told the national banking summit organised by the IBA and Ficci. “Falling commodity prices and astute food management by the government should help RBI (lower rates)”, said Rajan. Attributing the stock market crash to global turbulence, Finance Minister Arun Jaitley said the government and RBI were watching the situation and hoped that things will stabilise once the transient impact is over. “There is not a single domestic factor in India which has either contributed to it or added to it. These are external factors. I have not the least doubt that this turbulence is transient and temporary in nature. The markets will settle down,” he said. Stock market experts said today’s fall was mainly precipitated by the weak US manufacturing data that came in on the back of a slew of disappointing economic data from China, thereby heightening the global concerns. The preliminary US Manufacturing PMI fell to 52.9 in August, its lowest since October 2013, from a final July reading of 53.8. “The global deflationary pressures are once again hitting the equity markets across the world. We do acknowledge that the chances of global deflationary pressures are slowly rising. China’s economic slowdown and Europe region growing at mere 0.3 percent are causes of concern,” said G Chokkalingam, Founder & managing director, at Equinomics Research & Advisory. However, select market experts said the fall provided a greater buying opportunity for investors as India’s growth story still remains intact. “India is at the cusp of economic expansion based on huge consuming population and falling raw materials and consumable prices like the crude and base metals amongst others which will be hugely beneficial in terms of savings and increasing purchasing power which will fuel economic expansion. We believe that a fall in commodities will lead to a fall in long term inflation which in turn will lead to a fall in the Long term Interest rates which will trigger the next phase of a secular bull market. India clearly stands out from the rest of the world based its inherent economic strength,” said Jimeet Modi, CEO, SAMCO Securities. Similarly, Jayant Manglik, president, retail distribution, Religare Securities, said, “Indian economy still remains a bright spot. Of course, low commodity prices are good for India but a global slowdown is not. Anyway, this is no Black Monday, it is a buying opportunity and sharp investors are looking for good openings in specific stocks. Operationally, there are no issues due to stringent margin requirements. “Our markets may well be first off the block in recovering from this fall, it is time to look for bargains in high quality stocks,” said Manglik. All the 30 Sensex stocks ended in the red. Among the biggest losers, shares of Vedanta tanked 15.3 percent to Rs 80.25, Tata Steel slumped 13.1 percent to Rs 206.15, Gail tumbled 12.8 percent to Rs 271.90, ONGC plunged 11.2 percent to Rs 227.35, Bajaj Auto dropped 9.1 percent to Rs 2,188.45, Cipla declined 9 percent to Rs 634.65 and ICICI Bank fell 8.9 percent to Rs 269.85. Others such as Reliance Industries, Hindalco, Axis Bank, SBI, BHEL, Maruti, Tata Motors and NPTC ended around 7-9 percent lower.