Sensex crashes 550 pts as China equity sell-off, P-Note worries spook markets

Domestic stocks went into a tailspin on the first trading session of the week with benchmark Sensex crashing to an almost two-month low, spooked by a major sell-off in Chinese equities and panic amongst local investors that any government action to check investment flows through P-Notes could stifle fund inflows going ahead. Even the Finance Minister Arun Jaitley’s comments that the government will not take any action that may jeopardise investment climate failed to resurrect the market sentiment. [caption id=“attachment_2365500” align=“alignleft” width=“380”] PTI[/caption] As markets slipped into a correction mode since early trade, investors ran amok shunning stocks from banking and auto to metals and oil & gas companies, leading to an erosion of Rs 1.52 lakh crore of investor wealth in a single session. Extending losses for the third straight session, the 30-share benchmark S&P BSE Sensex ended the session at 27,561.38, down 550.93 points 1.96 percent from previous close. Intra-day, the index plunged 582.74 points to touch the day’s low of 27,529.57 before recovering some ground at close. Today’s loss was the biggest since June 2 when the Sensex tumbled 660.61 points, or 2.4 percent after the country’s official weather forecaster IMD predicted a deficient rainfall for the current season. In the last three sessions, the index has plunged almost 950 points on weak global market cues and subdued corporate earnings announcement so far. Market breadth ended weak with 1,751 stocks declining against 1,070 advances on BSE. Today’s fall was mostly precipitated by China’s stock market crash as the Shanghai Composite index plunged 8.5 percent to close at 3,725.56 amid fears of an economic slowdown and a weak PMI data on Friday coupled with a sell-off in commodities. Other Asian indices such as Nikkei ended nearly 1 percent lower at 20,250.10 and China’s Hang Seng closed 3.1 percent lower at 24,351.96, while key European gauges, too, fell sharply in intra-day trade. Analysts said markets in the next few sessions may witness sideways movement following the two-day US Federal reserve meeting on Tuesday & Wednesday where the discussion would mostly revolve around the impending interest rate hike decision. “Sell off in the market was mostly on account of a correction in the Chinese market and a bit of worry for the investors on the P-Note front. If China’s economy continues to stay subdued, this will have major impact on other markets as well, including India. We expect the markets to stay range-bound with a negative bias in the next few sessions,” said Rakesh Arora, head of research, India at Macquarie Securities Group. Among the laggards in the Sensex pack, Tata Steel was the biggest loser, tumbling 5.2 percent to Rs 251.40 as global commodity prices, including metals, continue to decline on the back of a subdued Chinese economy and weakening demand scenario worldwide. Auto major HeroMoto Corp dropped 4.8 percent to Rs 2,605.66, Hindalco plunged 4.4 percent to Rs 104.25, Axis Bank declined 4.3 percent to Rs 555.75, ONGC eased 4.1 percent to Rs 271.40, Bharti Airtel fell 3.8 percent to Rs 417.80 and Tata Motors was down 3.5 percent at Rs 377.60. Others such as Lupin, Vedanta, L&T, ICICI Bank, BHEL, NTPC, Infosys, GAIL and Reliance Industries were down around 3-3 percent each.