The Indian equity markets suffered a major setback on Monday amidst a broad based sell-off in global stocks as a crash in the Chinese markets along with the escalation of tension in the Middle East sp
The Indian equity markets suffered a major setback on Monday amidst a broad based sell-off in global stocks as a crash in the Chinese markets along with the escalation of tension in the Middle East spooked global investors sentiment.
The unexpected fall in Shanghai Composite Index, which tanked 7.4 per cent amidst a concern regarding growth slowdown forced the Chinese authorities to suspend stock market trading. It was the first time China used the “circuit breaker” mechanism it announced late in 2015.
Apart from the concerns regarding China led global growth slowdown, global investors also fears that the current stand-off between Iran and Saudi Arabia would escalate the sectarian conflicts in the Middle East, which has injected an element of uncertainty in the global oil market.
Mirroring the weakness in global stocks, the Sensex registered its biggest fall in nearly four months to end the day at 25,623.35, plunging 537.55 points or 2.05 per cent.
As a result, gold has again become a safe-haven for investors. In Mumbai, standard gold (99.9 per cent purity) shot up Rs 295 to end at Rs 25,460 per 10 grams. Globally, the precious metal gained 0.9 per cent to trade at $1,070.27 in Singapore, while it rose by 1.17 per cent to end at $1,073.4 ounce in London.
“Sentiments on Monday were dominated by the massive sell-off in Asia and Europe after suspension of trading in Chinese shares post the sharp plunge in Shanghai Composite. Geopolitical tensions in the Middle-East also dampened sentiment. China’s purchasing managers index (PMI) continues to underline its downward growth trajectory with equity markets reflecting a sub-seven per cent GDP figure for calendar 2016 and beyond,” said Vijay Singhania, founder director, Trade Smart Online.
The broader 50-share Nifty slumped 171.90 points or 2.16 per cent to close the day at 7,791.30. The fall in the market wiped out Rs 1.54 lakh crore worth of investors wealth pulling down the total market capitalisation of BSE listed firms to below Rs 100 lakh crore.
Most of the Asian equity markets closed the day with deep losses. While Nikkei 225 and Hang Seng Index lost 3.06 per cent and 2.68 per cent, others like Taiwan Weighted Index, Kospi Index and Straits Times Index dropped 2.68 per cent, 2.17 per cent and 1.62 per cent respectively. European stocks were also hammered badly. Most of key equity indices in Europe suffered losses in the range of 1.5 per cent – 4 per cent.
According to the provisional data released by the stock exchanges, foreign portfolio investors (FPI) sold shares worth Rs 667.15 crore. India’s volatility index, which measures investors expectation about the near term volatility jumped 18.06 per cent on the National Stock Exchange (NSE).
