Sensex ends at two-month low, but pares losses on late buying

Key share benchmark indices retreated for the second straight session, but closed off their intra-day lows on selective buying in late trades even as the benchmark Sensex hit two-month low on weak overseas markets sentiment, bleak global economic scenario and further erosion in local currency.[caption id=“attachment_2402462” align=“alignleft” width=“380”]  Reuters[/caption] Intra-day, the Sensex plunged 477 points to touch a low of 27,131.44, while taking a knock of 800 points in two sessions, including yesterday’s 324 points slump. Finally, the 30-share BSE S&P Sensex ended the week at 27,366.07, down 241.75 points, or 0.9 percent from previous close. From its all-time high of 30,024.75 touched in early March, the Sensex has fallen 9 percent since then. The broader 50-share CNX Nifty closed at 8,299.95, down 72.80 points, or 0.9 percent. Th broader market saw losers outnumbering gainers with 1,805 stocks declining against 1,010 advances on BSE. The rupee showed no signs of cooling off and declined further to a fresh two-year low of 65.90 against the dollar in intra-day trade, further worsening the sentiment. China’s decision to devalue its currency couple of week’s back has prompted other nations, including India, to keep their currency low. The worries about China have nullified all the optimism about the likely revival in the US. In fact, expectations are that the US Fed may delay its much-awaited rate hike due to slowdown fears. Even the latest data showed China’s August factory output shrank at its fastest pace in almost 6-1/2 years added to the local market gloom. According to a Reuters report, the preliminary Caixin/Markit China Manufacturing Purchasing Managers’ Index (PMI) stood at 47.1 in August, well below a Reuters poll median of 47.7 and down from July’s final 47.8. Chinese stock markets also felt the heat today with the Shanghai Composite index tumbling 4.3 percent at close while Hang Seng dropping 1.5 percent and Japan’s Nikkei ending neary 3 percent down. In the European markets, key indices such as FTSE, DAX and CAC were all trading lower. “Investors worldwide are getting increasingly wary about the revival in global economy, especially when the Chinese economy has been receding over the past few months. Also concerns over weakening monsoon in the current month and fund outflows has created lot of uncertainty amongst the investors,” said Alex Mathew, head-research, Geojit BNP Paribas. As the monsoon continued to play truant in the current month with rainfall deficit rising to 10 percent, there are indications that the RBI may not take decision on further rate cuts in a hurry given the rupee’s steep fall in recent weeks. After the July inflation fell to a record low, stock market experts were anticipating a rate cut sooner than later in order to to give a boost to the economy. However, weakening rainfall scenario and a steep fall in currency could derail the early rate cut hopes, which has led to pessimism amongst the investors. Dragging the index, shares of Vedanta fell 3.8 percent to Rs 94.75, Bajaj Auto declined 3.4 percent to Rs 2,407.35, HeroMoto Corp eased 2.8 percent to Rs 2,559.90, Gail slipped 2.7 percent to Rs 311.75, Tata Motors skidded 2.7 percent to Rs 332.75 and Bharti Airtel was down 2.5 percent at Rs 369.70. However, recovery in select index stocks provided some respite to a falling markets today. Among the gainers, shares of Hindalco rose 1.2 percent to Rs 86.05, Infosys gained 1.1 percent to Rs 1,150.60, Hindustan Unilever moved up 0.9 percent to Rs 881.70 and Cipla was up 0.9 percent at Rs 697.35.