Sensex ends 370 pts lower on IIP, Greek debt woes; Re breaches 47

[caption id=“attachment_81639” align=“alignleft” width=“380” caption=“Reuters”]  [/caption]

**3:35 pm:**On a day marked by the release of poor industrial growth data and sinking European and Asian markets, the Sensex closed provisionally at 16,497, 369 points lower, while the Nifty ended 112 points down at 4,947.

The market was first hit by bad industrial growth data: figures released by the government showed the Index of Industrial Production in July had slumped to 3.3 percent from a year earlier, its lowest in nearly two years, dragged down by a 15 percent annual decline in capital goods production.Reacting to the IIP numbers, Kaushik Basu, chief economic adviser in the finance ministry, said the RBI would have to balance growth concerns with efforts to tame inflation.

That shock was followed by slumping European markets, which hit a 26-month low on fresh fears of a Greek debt default, further weakening investor confidence.Consumer durables, metals, banks and IT stocks were the worst hit. Hindalco and Tata Steel were the biggest losers on the Sensex, shedding 5 per cent each.Among banks, SBI, ICICI Bank, Axis Bank, Federal Bank and Indusind Bank declined 4-5 percent each.

More from Investing

MSMEs are breaking the traditional convention. Look who’s funding them Scale-up your startup without an investor! Here’s how

However, some consumer goods stocks such as Hindustan Lever managed to stay in positive territory.Shares of Pipavav Defence and Offshore Engineering, surged over 10 percent after the company announced its plans to build submarines and warships.Reliance Industries also closed at Rs 805, after falling below Rs 800 during the trading session.In the currency markets, the rupee fell to 47.10 against the dollar - a 14-month low on fears of a pullout by foreign investors. Spot gold, meanwhile, was trading atRs 28,136 per 10 grams in Mumbai.

**3:00 pm:**The Sensex is down 360 points at 16,490, while the Nifty is 120 points down at 4,939. Bad industrial growth figures and weak European markets have jangled investors’ nerves. Consumer durables index has become the biggest loser on the BSE, slipping 3 percent. Technology, metals and bank stocks also continued to lose ground in volatile trade.

Kaushik Basu, chief economic adviser in the finance ministry, told CNBC that a contraction in India’s capital goods production in July is “a matter of concern”. Growth in the index of industrial production (IIP) in July slumped to 3.3 percent from a year earlier, its lowest in nearly two years, dragged down by a 15 percent annual decline in capital goods production.

In the precious metals markets, gold extended losses, following a similar trend overseas to trade 0.5 percent lower at Rs 28,014 rupees per 10 grams.

In overseas markets, European shares hit a 26-month low, led by bank stocks on concerns that policymakers are failing to find a permanent solution to the euro zone sovereign debt crisis and as fears of a Greek default intensified.

**2:20 pm:**The Sensex attempts a mild pullback as it cuts its losses to around 340 points after hurtling more than 450 points lower earlier. The benchmark is currently trading at 16,529. The Nifty, too has trimmed its losses to about 100 points and is trading around 4,956. Fears of a pullout by foreign investors have pushed the rupee to a 14-month low of 47.10 against the dollar.

Domestic consumption stocks are acting act as safe havens for investors. Hindustan Lever rises nearly 4 percent even as other sectors slide. Ambuja Cement also gains about 3 percent. Grasim also manages to stay in positive territory with a less than 1 percent gain.Among the losers on the NSE, HCL Tech was the biggest, sinking nearly 6 percent. Reliance Power was also nursing a 5 percent loss - the company had announced earlier that it was cancelling its plant in Raigad. Reliance Industries, meanwhile, limbed to Rs 807, after falling below Rs 800 earlier. ICICI Bank and Axis Bank have lost about 4 percent each.

In Europe, renewed fears of a Greek debt default has rattled investors; shares have hit a 26-month low. In addition, stock futures pointed to sharp falls for US equities as futures for the S&P 500, the Dow Jones and the Nasdaq 100 traded down 1.6 to 1.9 percent.

1:40 pm: The Sensex continued its downward spiral, reflecting the slide in global stock markets nervous about a Greek debt default, as well as due to a deepening slowdown in the Indian economy. The benchmark is down 430 points at 16,435. The Nifty is down 123 points at 4,935.Fears about a Greek default rose last week after senior politicians in German Chancellor Angela Merkel’s center-right coalition started talking openly about it.Greece, meanwhile, confirmed on Monday that the country has cash for only a few more weeks.The euro dived to a seven-month low against the US dollar and a 10-year trough versus the yen. The euro fell as low as $1.34949, its lowest since February.

In local markets, the rupee plunged past the 47 mark against the dollar on fears that risk-averse investors would pull out money from equities in emerging markets. The July IIP data has further scared investors: growth in India’s industrial output in July slumped to its lowest in nearly two years as high interest rates cooled demand.Despite the weak data, the RBI is still expected to raise rates at its Friday policy review. Reacting to the IIP numbers, Montek Singh Ahluwalia, deputy chairman of the Planning Commission says “this is going to be a slow year”.

**1:00 pm:**The Sensex has plummeted more than 420 points to 16,437, while the Nifty has tanked 137 points to 4,924. Every sector index is in the red; the biggest losers are metals and IT - both have given up more than 3 percent over worries about the impact of the darkening global economic outlook. Jindal Steel, Hindalco and Sterlite have tumbled 4-6 percent. Tata Motors, whose CEO resigned late last week, also gave up about 5 percent. Infosys is down 3.6 percent.

European shares dropped sharply, led by banking stocks on concerns that policy makers were not doing enough to come up with a permanent solution to the euro zone peripheral debt crisis as worries intensified that Greece could default. French banks, which have high exposure to sovereign peripheral debt, were standout losers on fears they could be hit by a credit downgrade from Moody’s after a three-month review. Across Asia, the Japanese Nikkei ended at a two-and-a-half year low, while Hong Kong’s Hang Seng was 4 percent lower.

12:25 pm: European markets open 2-3 percent lower over fresh worries of a Greek debt default, which has added to the gloom over local IIP data. Reactions to the industrial data estimates suggest the RBI will stick to raising rates one more time on 16 September. " Today’s figures definitely indicate a slowdown in overall manufacturing growth momentum. This means India’s GDP growth for the full year may slip below 7.5 percent," says Rupa Rege Nitsure, chief economist, Bank of Baroda, told Reuters. Anubhuti Sahay, economist, Standard Chartered Bank, says the numbers are likely to add to the market view that the RBI might pause on September 16. “But we still expect a 25 basis points increase in the repo rate on Friday. Increased global risks can be a game changer,” says Sahay. A Prasanna, economist, ICICI Securities Primary Dealership notes that “this data cannot be a credible guide to RBI policy. Inflation will continue to hold the key for the September rate decision.” The Sensex is still down more than 370 points, at around 16480, while the Nifty is 121 points lower at 4,938.

11:45 am: The Sensex loses more than 390 points to trade at 16,474 as industrial data comes in worse than expected. The Nifty is at 4,937, down 122 points. C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, tells CNBC that the IIP could improve in second half of this financial year (April to March). He believes the Reserve Bank of India will continue to look at taming inflation but will also take the IIP numbers into account. The capital goods index is down 2.4 percent, hit by the poor performance of the sector. Consumer goods company Hindustan Unilever, however, continues to ascend higher – the stock is up 3.4 percent. However, all the sector indices on the BSE are in the red, with metals, IT and banks leading the losses.

11:15 am: July’s index of industrial productions stuns market, coming in below the lowest forecasts of a CNBC poll at 3.3 percent. Consumer durables growth was 8.6 percent versus 14.8 percent a year ago, while manufacturing output slumps to 2.3 percent from 10.8 percent a year ago. Consumer goods growth, however, managed to grow 6.2 percent versus 5.8 percent a year ago. Capital goods stocks tank on news that capital goods sector growth declines 15 percent from a year ago. The Sensex is 355 points down at 16,510. Siemens, BHEL, Larsen, Crompton Greaves tank by 2-4 percent. Bond markets reacted to the bad industrial data: the benchmark 10-year bond yield rose to 8.26 percent as prices slumped. Most experts on CNBC believe the RBI will most likely go ahead with a 25 basis interest rate hike this week.

11:05 am: IIP numbers have been released: July’s Index of Industrial Production is at 3.3 percent, compared with 8.8 percent in June, CNBC reports. The market tumbles on the news: the Sensex plunges 374 points to 16,492, while the Nifty has tumbled to 4,943, down 115 points.

10:25 am: The Sensex is trading 280 points down at 16,586, while the Nifty is 4,968, 90 points lower. Investors are dumping metals, IT and banking shares and taking cover in local consumption plays. Hindustan Unilever, Colgate Palmolive, Dabur and Marico are trading 1-2 percent higher. The FMCG sector index is the only index in positive territory on the BSE. Earlier, Amit Bhartia, partner at GMO, said that domestic participation in equity markets is at record lows. In currency markets, the rupee hits a new one-year low of 46.98 against the dollar, the weakest since September 1, 2010, according to Reuters, on fears over dollar outflows from local equity market and a slide in the euro.

9:50 am: The Sensex has extended its losses to more than 310 points and is trading at 16,546. The Nifty has dived 97 points to 4,960. Investors are battering metals stocks: Jindal Steel, Tata Steel, Hindalco, Sterlite have lost 3-4 percent. Tata Motors, whose CEO resigned late last week, also declined 3.5 percent. Intensifying concerns over the health of the US and European economies also took their toll on IT stocks: TCS and Infosys have lost about 3 percent each. Hindustan Unilever remained the only Sensex stock in positive territory, up 1 percent.

9:20 am: Following global cues, the markets opened on a glum note, with the Sensex dropping more than 250 points in early trade to touch 16,612, and the Nifty shedding 80 points to 4,979. The Sensex had earlier shed nearly 290 points before recovering some ground. Twenty-nine of the 30 Sensex stocks are in the red. Only Hindustan Unilever managed to remain positive with a 0.8 percent gain. IT, metals and banks led the slide on the BSE, with all three sector indices giving up 1-2 percent each. Hindalco was the biggest loser on the Sensex, declining 3.4 percent. Tata Motors is down 3 percent.

Amit Bhartia, partner, GMO, says that Indian markets will continue to follow global cues. What happens in Europe will be crucial for Indian markets over the next few months, he adds. Bhartia also says inflation is a “major challenge for Indian equities”.

**9 a.m:**Asian indices are off their lows for the morning, but still sharply in the red. Japan’s Nikkei index is still trading 2 percent lower. Hong Kong’s Hang Seng Index is down 3.2 percent; and Australia’s S&P ASX is 3.2 percent in negative territory. Australian markets were down 3.5 percent at one point.

**8 a.m:**A brutal day appears to lie ahead when the market opens in Mumbai. Early cues from Asian markets are very grim.